CORPORATE PROFILE

Sunpower Group Ltd. (SGX stock code: 5GD. electricity and industrial services. Its sizeable
SI) was founded in 1997 and listed on the SGX- project portfolio of 10 operational plants and
ST (Singapore Exchange Securities Trading) in 1 project expected to start trial operation
2005. It is a leading provider of clean industrial has the proven ability to generate long-term,
steam, civil heating, electricity, and industrial high-quality, recurring income and cash flows
services with a sizeable portfolio of Green through long-term concessions of typically
Investments (“GI”) projects. The projects 30 years and extensive pipeline networks
facilitate the development of the circular that enhance de facto exclusivity within their
economy in industrial parks and help China coverage areas.
attain its goals of carbon peak and carbon
neutrality through initiatives such as the clean The Group also focuses on the long-term value
and efficient use of feedstock and diversifying of its shareholders. It has built a valuable and
its sources of feedstock to include industrial sizeable portfolio of projects that generate
sludge and solid waste. attractive Internal Rates of Return (“IRR”) and
a high Net Present Value (“NPV”) of future cash
Following the disposal of the Manufacturing flows. The Group paid a substantial special
and Services (“M&S”) business in 2021, the dividend in 2021 from the proceeds of the M&S
Group’s sole business is the GI business which disposal that brought investment returns. In the
invests in and operates centralised facilities long run, the Group has the potential to further
that supply clean industrial steam, civil heating, unlock value for shareholders.

CONTENTS

001 Corporate Profile 018 Key Management

001 Key Awards and Accreditations 019 Corporate Structure

002 Green Investments (GI) 020 Sustainability Report Summary

008 GI Financial Highlights 024 Corporate Governance Report

009 Group Financial Highlights 056 Financial Statements

010 Strategic Institutional Investors 172 Statistics of Shareholdings

011 Corporate Information 174 Notice of Annual General Meeting

012 Chairman’s Statement

Additional Information on
179
Directors Seeking Re-election
014 Board of Directors
KEY AWARDS AND ACCREDITATIONS
Sunpower’s resilient performance and achievements have earned it various awards. In addition, its contribution to green
development and environmental protection has been recognised through membership in various environment and energy related
associations. With its accomplishments, Sunpower was included in the China Energy Group Top 500 List from 2019 to 20211.

China Energy Group Top 500 List Deloitte Best Managed Company China Well-Known Trademark
Award in China

National Key Protected Brand Model Enterprise For Promotion of Jiangsu Provincial Water-Conserving
Low-Carbon Environmental Protection Enterprise

High-tech Enterprise of Guangdong Excellent Enterprise in Steam Supply Economic Development Contribution
Province Industry in Suzhou Award

Outstanding Private Enterprise Member of China Association of Council Member of Hebei Association
Environmental Protection Industry of Environmental Protection Industry

1 2019 China Energy Group Top 500 List (354):

https://baijiahao.baidu.com/s?id=165292439
0698522739&wfr=spider&for=pc
2020 China Energy Group Top 500 List (334):
https://baijiahao.baidu.com/s?id=168639268
9152474506&wfr=spider&for=pc
2021 China Energy Group Top 500 List (327):
https://www.maigoo.com/news/610032.html

Member of Jiangsu Association of Member of Energy Association of

Environmental Protection Industry Jiangsu Province

ANNUAL REPORT 2022 001

GREEN INVESTMENTS
Leading provider of industrial steam and supplier of industrial services

OVERVIEW OF GI BUSINESS
Sunpower is a leading provider of industrial services. The GI business invests in and operates centralised facilities that supply clean industrial
steam to a diverse range of industries supported by structural demand; pollution-free civil heating to households; and electricity to the State Grid.
Its projects also provide complementary industrial products and services such as compressed air and treatment services for industrial sludge
and general solid waste to industrial park enterprises.

Within 6 short years, Sunpower’s GI business has quickly scaled up to 10 projects in operation and 1 project expected to start trial operation,
with a proven track record, a leading market position and strong brand equity.

LONG TERM CIRCULAR EXCLUSIVE SUPPLIER INCOME & SIZEABLE GI PROJECT

STRATEGY ECONOMY MODEL typically with long term CASH FLOWS PORTFOLIO
aligned with helps industries achieve concessions and extensive that are high quality, with value unlocking ULTRA-LOW
government policies ultra-low emissions and pipeline networks that recurring and potential emissions capability
realises economic benefits enhance de facto exclusivity long term

TYPICALLY
SO2 , NOX
and Dust
YEARS

8.68 ~405
MILLION
TONNES KM 525 ~20
(+ 9.5% YoY)

EXPERIENCED in total steam sales in total pipeline length in total existing Customer
MANAGEMENT volume in FY2022 individual customers Industries
that is professional and proactive

Rapid Expansion to a Sizeable Portfolio in 6 Years

10 11
9 9
8
7

4
Note: number of GI
projects in operation

2017 2018 2019 2020 2021 2022 2023

Forecast
Changrun Project Yongxing Plant Shantou Project

Suyuan Plant Lianshui Project Quanjiao Project Xinyuan Plant

Xintai Zhengda Project Tongshan Project Jining Project Shanxi Xinjiang Project

Expected to start trial operation

002 SUNPOWER GROUP LTD.

GREEN INVESTMENTS
Leading provider of industrial steam and supplier of industrial services

DEVELOPMENT STRATEGY ALIGNED WITH

GOVERNMENT POLICIES AND CONTINUOUS 14 TH
ENHANCEMENT OF EXISTING PLANTS Five-Year Plan for Circular
Economy Development
The Group’s long-term development strategy is aligned with national energy policies
• Promotes centralised steam
that facilitate carbon peak and carbon neutrality for China, and promote clean
facilities
and efficient utilisation of feedstock, diversification of feedstock sources, and the • Promotes development of circular
development of green industries. Through its centralised GI projects, the Group economy industrial parks
facilitates the development of circular economy industrial parks and centralised • Promotes more efficient resource
steam generation facilities throughout China. utilisation
• Promotes greater conservation
and recycling of resources
“Multiple” pollution sources can be eliminated with just “One” centralised GI plant

20 TH
that achieves emission levels equal or even lower than the national standard for
natural gas emissions, which helps the industrial park and park enterprises attain
ultra-low emission status. By helping to shut down hundreds of small dirty boilers, National Congress
GI projects have reduced emissions of dust, sulfur dioxide (SO2) and nitrogen oxide on Carbon Peak,
(NOx) by more than 60,000 tons per year. Clean & Efficient Use
of Feedstock

• To reach carbon peak in a well-

planned and phased way
• To better adjust and control the
amount and intensity of energy
consumption
• To promote the clean and high-
Sulfur Nitrogen efficiency use of feedstock
dioxide oxide
• To improve the statistics and
accounting system and the
cap-and-trade system for carbon
emissions

Pioneer Adopter of the Circular Economy Model (“CEM”)

The 14th Five-Year Plan promotes development of circular economy industrial parks and centralised steam facilities.

Benefits for Society

Electricity Electricity • Achieves the comprehensive utilisation of resources.
• Helps solve people’s livelihood problems and improves
their well-being.
Electricity • Facilitates the development of the circular economy of
Residential the country.
Industrial Park
Households

Heating
Benefits for Industrial Parks
GI • Helps parks eliminate multiple sources of pollution
risks, and ensure safe and controlled emissions.
Heating Project Steam • Helps enterprises to achieve quality and sustainable
development.
• Help parks attract new investments and expand further,
thus achieving win-win development.
Electricity
Treated Water Benefits for the Shareholders
• Realises additional revenue from sludge treatment and
sale of waste products.
Waste products, Waste
e.g. sludge Products, e.g. • Realises greater economies-of-scale from an integrated
Sewage Treatment Ammonium Fertiliser, Building
operational model
Plant Nitrate & Ash Material Factories
• Reduces costs from measures such as blending sludge as
Sewage & Wastewater
a feedstock substitute and use of treated recycled water.

ANNUAL REPORT 2022 003

GREEN INVESTMENTS
Leading provider of industrial steam and supplier of industrial services

REPLICABLE AND ADAPTABLE BUSINESS MODEL

GI business model facilitates high-quality, long term, recurring income and cashflows, enhances high entry barriers, and provides
competitive edge.

Leading Industrial Sizeable Valuable Superior Long Term

Services Provider GI Project Portfolio Capabilities Growth Potential

Strong market position Rapid scale-up within 6 years Exclusive supplier status A large addressable market
as best-in-class industrial to 10 operating projects and 1 based on typically ~30 year with space for further
steam supplier and industry project expected to start trial concessions and extensive development
pioneer with strong brand operation pipeline networks that
enhance de facto exclusivity
equity Growing steam demand
Strategically located across
from customers’ expansion,
5 provinces in 11 industrial Typically B2B Model
An early mover in the parks that either have with the ability to require relocation of enterprises,
development of the circular strong economic viability prepayment or payment growth of industrial parks
economy and attaining in economically developed within a certain period and closure of small dirty
Carbon Peak and Carbon areas or have industry after use boilers
Neutrality which practises clusters of excellence
ESG and sustainability Price adjustment Continuous evaluation of
values in every aspect Large and diversified mechanism that links pipeline for quality projects
customer base from costs to prices of with potential
over 20 industries that industrial steam
Strategy aligned with are vital parts of China’s
current national policies economic infrastructure Application of innovative Mitigation Measures and
and the direction of future technology packages Differentiation Strategies to
policy development Robust network of pipelines further enhance profitability
now extending 405km Technological transformation
Long term support from and continuously growing, and upgrades that improve Refined Operational
strategic institutional spanning the approximate profitability and efficiency Management System to
investors DCP and CDH width of the Yangtze River maximise efficiency and
Delta from east to west Flexibility to use diversified effectiveness and reduce
sources of feedstock
Two-pronged strategy with exposure to risks
Supply of steam as a non- including sludge, solid
emphasis on the quality of discretionary production waste, biomass, etc.,
development that amplifies input for steam production
its strengths and drives its
sustainable development GI projects generate high- Capacity to secure robust
quality, recurring cashflow pipelines and identify,
over the long term evaluate and invest in
quality GI projects
A high Net Present Value
of future cashflows backed Seasoned and disciplined
by an attractive double-digit management with proven
project IRR track record

Attractive IRRs of existing operational GI projects Further potential to unlock shareholder value

Food
Renewable Energies
Large and diversified customer base Fertiliser Fodder
from over 20 industries Pharmaceutical Rubber

Chemical Plastic Recycling

GI projects’ reliable and stable supply of steam meets
customers’ continuously strong demand. Over the years, GI
Textile Wholesale and Retail
projects have established a large and diversified customer
base from a wide and diverse range of over 20 industries.
Metallurgy Wood Processing
Its downstream customers are located in the industrial parks
that either have strong economic viability in economically Printing and Dyeing Machinery and Electrical
developed areas or have industry clusters of excellence. Business Services Resident Services

004 SUNPOWER GROUP LTD.

GREEN INVESTMENTS
Leading provider of industrial steam and supplier of industrial services

High entry barriers

1. Typically ~ 30-year exclusive concession

rights with first right of renewal

2. Extensive networks of steam pipelines

strengthen de facto exclusivity for the
supply of industrial steam
GI Project

Extensive steam pipelines also

create de facto exclusivity for the
GI projects

Typically B2B Model

STEAM AND ELECTRICITY GI plants typically have B2B arrangements that require either pre-
payment or post-payment after use. In addition, contracts are signed
directly with industrial customers instead of the government with a
TARIFFS contractual price adjustment mechanism that links feedstock cost
to steam price and allows reliable profitability across cycles in the
Customers GI Project
long-term.

Application of innovative technology packages

The GI projects apply innovative technology packages that enhance their already strong entry barriers against competition, lower emissions
of pollutants, reduce consumption of feedstock, and improve operational efficiency.

Long Distance Steam Environmental Protection Energy Saving

Distribution Pipelines Technologies Technologies
Technology
• Increase geographical reach to captive • Low nitrogen combustion technology • High efficiency heat exchange
customers; achieve economies of scale • Desulfurisation and denitrification technology
• Reduce feedstock, as minimal technology • Gas-gas heater technology
temperature and pressure is lost in • Technology to eliminate haze and • Low temperature economizer
transmission ammonia escape technology
• Bag filter + wet electrostatic precipitator • Flue gas sludge drying &
comprehensive utilisation technology
Ability to meet or be even lower than
emission standard of natural gas Industry Sunpower 30

Emission Newly- Newly-built Coal-fired Natural Sunpower’s

Limit built Coal-fired Power Gas Capabilities
(mg/m )
3
Coal-fired Power Generation Boilers
Boilers(1) Generation Boilers in & Gas 0.06-0.1
Boilers(2)
Key Areas* Turbines(2) 15 15
(2)

Dust 50 30 20 5 <5
0.015-
≤5 0.05
SO2 300 100 50 35 < 35
Temperature Loss Pressure Loss Coverage Radius
NOX 300 100 100 50 < 50
(°C/KM) (MPA/KM) (KM)

(1) ‘Boiler Air Pollutant Emission Standard’ by the Ministry of Ecology and Environment of the PRC (GB13271-2014) http://www.mee.gov.cn/ywgz/fgbz/bz/bzwb/
dqhjbh/dqgdwrywrwpfbz/201405/t20140530_276318.shtml
(2) ‘Emission Standard of Air Pollutants for Thermal Power Plants’ by the Ministry of Ecology and Environment of the PRC (GB 13223-2011) http://www.mee.gov.
cn/ywgz/fgbz/bz/bzwb/dqhjbh/dqgdwrywrwpfbz/201109/t20110921_217534.shtml
* Key regions mainly refer to the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Pearl River Delta region

ANNUAL REPORT 2022 005

GREEN INVESTMENTS
Leading provider of industrial steam and supplier of industrial services

CONTINUED RAMP-UP AND EXPANSION OF EXISTING GI PLANTS

The Group’s existing GI plants continued to ramp up and expand with long term growth potential due
to the following key structural growth drivers.
Exclusive supplier of non-discretionary
production inputs in the industrial Continuous closures of
parks that either have strong economic small dirty boilers
viability in economically developed drive demand to centralised facilities.
areas or have industry clusters of
excellence.
Continuous relocation of
Organic growth of customers and enterprises to industrial parks
expansion of industrial parks due to the government’s zoning
bring strong steam demand. policies and/or cost benefits.

Ultra-low emissions help to earn

more emission credits which enable Technological transformation
new plants to relocate into the parks. and upgrades that further improve
project profitability and efficiency.

Further, the Group proactively The Group also applies strategies that
looks for measures to mitigate the can allow it to differentiate its services
Mitigation impact of headwinds (“Mitigation as it seeks out new growth areas Differentiation
Measures Measures”)1. (“Differentiation Strategies”)2. Strategies
PRONGED
GI
STRATEGY
THAT CONTINUOUS EVALUATION OF PIPELINES FOR
BUILDS QUALITY PROJECTS WITH POTENTIAL
GROWTH Sunpower applies a disciplined investment strategy. It has established
DRIVERS a mature and replicable model across the GI Business Cycle which allows
the Company to have a competitive edge in sourcing, evaluating, investing,
constructing, upgrading and operating GI projects. This enables the Company
to realise its long term growth.

01 New Project Identification

& Securement 02 Project Investment
• Established and proven track • Ability to establish high entry
record. barriers.
• Experienced business teams. • Resilient and adaptable GI
• Disciplined project sourcing and business model.

•
evaluation process.
Robust pipeline of projects
GI • Strong strategic support by
renowned PE firms DCP and
being evaluated. Business CDH.
• Multiple potential sources
Cycle of capital to fund GI growth
strategy.
04 Project operation,
reform & upgrade 03 Project construction
• Seasoned management with proven • Experienced in project planning,
track record in achieving excellent results. management and construction.
• Adoption of Circular Economy production model. • Complete supervision system
• Refined management of each project. that reduces potential
• Know-how to reform and upgrade acquired construction and cost overrun
plants to improve operational efficiency. risks.
• Ability to apply innovative
integrated technologies for
environmental protection &
energy-saving.

1 Mitigation Measures included but were not limited to raising steam prices with customers; diversifying the feedstock mix to include biomass, sludge and
general solid waste; continued implementation of the cost-reduction strategy of controlling unit material use; stocking up on feedstock when prices are
conducive; optimisation of steam transmission efficiency; strengthening the ramp-up of GI plant utilisation by connecting to more customers; and further
reinforcing the refined management of the plants.
2 Differentiation Strategies to realise the medium to long term growth potential of each GI project, depending on the unique characteristics of each industrial park.

006 SUNPOWER GROUP LTD.

GREEN INVESTMENTS
Leading provider of industrial steam and supplier of industrial services

ESTABLISHED OPERATIONAL MANAGEMENT SYSTEM WITH PROVEN RISK

MANAGEMENT CAPABILITIES
With extensive experience, the seasoned and well-disciplined management team has developed specialised skills, strong
execution capabilities and entrepreneurship.

Board of Directors

Risk Management Committee Audit Committee Sustainable

Development
Lead Members of Committee
Independent Management Internal Auditor
Director External Auditor

Sustainable
Development
Risk Control Teams - Group Level Work Group

Project Companies

Over the years, Sunpower’s management has created and refined an Operational Management System that targets to maximise
efficiency and effectiveness and reduce the Group’s exposure to risks.

The Group has strived to enhance Risk Management Systems and Practices in order to provide sound internal evaluation, and
control and oversight of financial, operational, compliance and other risks.

The Group has implemented the Comprehensive Budget Management System (“CBMS”) for decades. The CBMS is composed
of modules of overall budget indexes that include production, sales, cost, expenses, contingent provisions, comparison analysis,
and performance appraisals etc., which helps the Group to operate from financial perspective, to manage its target and to achieve
its target. In addition, it also enables the Group to build a scientific approval limits system which allows the project companies to
operate independently within the authorised scope.

Sustainable Development Committee has been set up to facilitate the sustainability of the Group. It guides the Sustainable
Development Team, comprising senior management and heads of various functional departments. In addition, it provides insights
for the Board to apply the sustainability approach to improve the governance of the Company.

Climate Change Risk Management System was established to urge the whole company to participate actively in the formulation
and implementation of comprehensive strategies to deal with climate risks; actively respond to climate change risks; lay out and
grasp the opportunities generated by climate change; and contribute toward the control of global climate change risks

Sunpower is committed to better sustainability in its business by incorporating material Environmental, Social and Governance
(“ESG”) topics into every aspect of its operations, and ensuring implementation of ESG related strategies through all levels.
For further information, please refer to the Sustainability Report Summary and the 2022 Sustainability Report.

ANNUAL REPORT 2022 007

GREEN INVESTMENTS
Leading provider of industrial steam and supplier of industrial services

GI FINANCIAL HIGHLIGHTS

Robust Financial Performance with Growth

2022 was the most challenging year ever for Sunpower since 38.9% YoY to RMB2.88 billion, faster than the growth in steam
the inception of the GI business. Several force majeure events sales volume, mainly due to the significant rise in steam price
affected business operations during the year. The pandemic based on the price adjustment mechanism. Further, GI project
broke out and spread through the country from the beginning profitability improved on the back of the strong demand
of the year, culminating in the lifting of pandemic control and for industrial steam, the execution of the price adjustment
prevention measures at the end of the year. The geopolitical mechanism and the Mitigation Measures2. GI recurring EBITDA3
conflict which broke out in February set off a global energy rose 32.8% YoY to RMB598.0 million, while GI recurring PATMI4
crisis and caused energy prices to soar globally. Further, other grew 31.2% YoY to RMB158.2 million. Operating cash flow of
related events including power curtailment due to extremely the GI projects5 rose 43.0% YoY to RMB364.1 million.
high temperatures also took place in 2022. As a result, the
operations of the GI projects and their customers were affected Sunpower will continue to focus on improving shareholders’
throughout the year. value in the long run. The Group remains well placed to benefit
from the long-term growth potential of the centralised steam
Despite these challenges, demand for steam remained strong supply industry and circular economy industrial parks in
and growing. Total steam sales volume rose 9.5% YoY to 8.68 China. It is expected that a high NPV of future cashflows will
million tons in FY2022. Meanwhile, GI recurring revenue1 rose be generated.

CAGR (2019-2022) CAGR (2019-2022) CAGR (2019-2022)

20.4% 35.6% 11.4%
2,880.8
8.68
598.0

7.93 2,074.5
488.7
5.46 1,355.1 450.3
432.9
4.97 1,155.3

2019 2020 2021 2022 2019 2020 2021* 2022 2019 2020 2021* 2022

Total Steam Sales Volume GI Recurring Revenue GI Recurring EBITDA

Million Tons RMB Million RMB Million

Notes:
* After adoption of Amendments to SFRS(I) 1-16: Property, Plant and Equipment: Proceeds Before Intended Use that came into effect on 1 January 2022 and
is retrospective for FY2021 financial results.

1 GI recurring revenue refers to recurring revenue generated by the GI business, including commission fees recognised in accordance with SFRS(I) INT15. It
excludes one-time contributions from services for BOT projects, including EPC services, that are performed by the Group’s internal project management
department, recognised under IFRIC 12 Service Concession Arrangements.
2 Refer to the 1Q 2022 earnings release dated 15 May 2022 for more information.
3 GI recurring EBITDA refers to the recurring Earnings before Interest, Tax, Depreciation and Amortisation of the GI Business. It excludes gains or costs incurred
by way of the Manufacturing & Services (M&S) business disposal such as excess cash dividends, gain on disposal, withholding tax, etc. in 2021; one-time
contributions from services for BOT projects, including EPC services, that are provided by the Group’s internal project management department, recognised
under IFRIC 12 Service Concession Arrangements; as well as expenses incurred by the Company that are not related to the running of the GI Business, such
as listing-related expenses and remuneration of the employees at the group level, etc., which reflects the operating results of the GI business.
4 GI recurring PATMI refers to the recurring Profit After Tax and Minority Interests of the GI Business which reflects the profit of the GI business attributable to the
Group. It excludes gains or costs incurred by way of the M&S disposal such as excess cash dividends, gain on disposal, withholding tax, etc. in 2021; one-
time revenue contributions from services for BOT projects, including EPC services, that are provided by the Group’s internal project management department,
recognised under IFRIC 12 Service Concession Arrangements; and expenses incurred by the Company that are not related to the running of the GI Business,
such as listing-related expenses and employee remuneration at the group level, etc.
5 GI operating cashflow refers to cashflow generated by operating activities of the GI Business.

008 SUNPOWER GROUP LTD.

GREEN INVESTMENTS
Leading provider of industrial steam and supplier of industrial services

GROUP FINANCIAL HIGHLIGHTS

GROUP FINANCIALS FROM CONTINUING OPERATIONS (RMB’M) 2021(1) 2022

Group revenue 2,929.5 3,448.6

Group gross profit 328.0 513.1

Group PATMI(2) 139.6 136.5

Group underlying operating cash flow(3) 228.3 316.5

Notes: The 2021 and 2022 financial figures in the table above reflect the financial performance of the Group from continuing operations and excludes that of the M&S
business following its disposal.
(1) After adoption of Amendments to SFRS(I) 1-16: Property, Plant and Equipment: Proceeds Before Intended Use that came into effect on 1 January 2022 and is
retrospective for FY2021 financial results.
(2) FY2021 group PATMI excludes gain on disposal of RMB934.3 million and expenses incurred by the Company in connection with the M&S disposal, namely the
excess cash dividend paid to Convertible Bond holders which is recognised as finance cost; project adviser fees; and withholding taxes.
(3) Underlying operating cash flow excludes annual CB interest. CB interest was RMB21.0 million in FY2021 and RMB11.3 million in FY2022.

2022 was the company’s first full year of operation with GI business after the disposal of M&S in 2021. Group revenue in FY2022
was RMB3.45 billion, mainly due to ramp-up of GI business and contributions from services for BOT projects, including EPC
services, which are provided by the Group. PATMI without the financial effects of CBs in FY2022 was RMB136.5 million, which
reflects the operating results of the Group. Group underlying operating cash flow was RMB316.5 million in FY2022.

CAGR (2017-2020) CAGR (2017-2020)

27.3% 34.0% 981.5
4,058.8
3,604.6 888.6
3,262.9 693.8

407.8
1,965.5

2017 2018 2019 2020 2017 2018 2019 2020

Group Revenue Group Gross Profit
(RMB’M) (RMB’M)

CAGR (2017-2020) CAGR (2017-2020)

47.9% 84.0% 535.4
377.0
352.2 456.3

253.6
246.6

116.6
85.9

2017 2018 2019 2020 2017 2018 2019 2020

Group PATMI Group Underlying Operating Cash Flow
(RMB’M) (RMB’M)

Note: The 2017-2020 financial figures in the charts above reflect the financial performance of the Group before the disposal of the M&S business.
Group revenue was recognised under IFRIC 12 Service Concession Arrangements.

ANNUAL REPORT 2022 009

STRATEGIC INSTITUTIONAL INVESTORS

1st CB Tranche 2nd CB Tranche

DCP and CDH initially invested US$110 million via the first CB DCP and CDH committed to a further investment of up to
tranche (CB1) in March 2017. US$70 million in May 2018, of which US$20 million of second
tranche CBs (CB2) was issued in October 2018.

DCP Capital Partners L.P. (“DCP”) and CDH China Management The Bondholders recognise that Sunpower has the technical
Company Limited (“CDH”) (collectively, the “Bondholders”) expertise, capability and know-how to achieve sustainable
are experienced and respected private equity investors in growth in earnings and cashflow as the GI business continues
China that have invested and nurtured many leading Chinese to grow. Their long-term capital support is also a strong
companies, building outstanding track records across multiple recognition and endorsement of Sunpower’s growth potential.
economic cycles. The Bondholders share the same vision Leveraging on their resources and portfolio management
as the company management for the GI strategy. They have capabilities, DCP and CDH are able to add value to Sunpower
invested a total of US$130 million in Sunpower through by working in partnership with the Group’s management to
subscriptions to two tranches of Convertible Bonds (CBs). accelerate the Group’s business expansion.

Selected Investments by DCP and CDH Teams

Belle International Qingdao Haier Hengan International Midea Group WH Group COFCO Meat Focus Media
China’s Leading Women Global Leader in China’s Largest Napkin Global Leader in Global Leader in Meat China’s Leading Meating China’s Largest Out-of-
Shoes Retailer Home Appliances and Diaper Producer Home Appliances Processing Processing Company home Advertising Network

Uxin Greenland Group CICC Mengniu Dairy Ping An Insurance Modern Dairy Nanfu Battery
China’s Leading Online China’s Leading Real China’s Leading China’s Leading China’s Leading China’s Leading China’s Leading Alkaline
Used-car Platform Estate Conglomerate Investment Bank Dairy Company Insurance Provider Dairy Company Battery Producer

Source: DCP and CDH. Please note that all risk disclosure, disclaimers and other similar content in the Private Placement Memorandum, dated February 22, 2018,
and the Preliminary Information Document, dated August 10, 2017, of DCP Capital Partners, L.P. apply to the information above.

DCP and CDH have a unique investment vision and strong investment capabilities. They actively provide post-investment
management services for investee companies to enhance their core competitiveness and create long-term value for them. This
has been well proven through the awards that DCP and CDH received from well-known ranking institutions in China in 2022.

2022 China Private Equity Investment Institution

In 2022, DCP and CDH were included in the China Venture
TOP 100
Capital & Private Equity Annual Ranking 2022 China Private
Equity Investment Institution TOP 100, and were ranked No.17
and No.47 respectively by Zero 2 IPO, a HK-listed professional 17 TH 47 TH
ranking institution in China.

China Venture, an independent third-party institution that has

been publishing professional ranking lists for 16 years, included 3 RD 4 TH
CDH among the TOP 30 2022 Private Equity Institution with the
Most Attention from LP in China, and included DCP among the 2022 Private Equity 2022 Best Private
TOP 30 2022 Best Private Equity Institution in the Guangdong- Institution with the Most Equity Institution in the
Hong Kong-Macao Greater Bay Area of China. Attention from LP in China Guangdong-HK-Macao
Greater Bay Area of China

Further, CDH and DCP were both included into its list of TOP China Venture Capital & Private Equity Institutions
for 2021-2022
30 China Venture Capital & Private Equity Institutions for 2021-
2022 by 21st Century Business Herald, a senior economic
media organisation in China. TOP30
010 SUNPOWER GROUP LTD.
CORPORATE INFORMATION

Guo Hong Xin Wang Dao Fu (Chairman)

(Non-Executive Chairman) Guo Hong Xin
Ma Ming Lau Ping Sum Pearce
(Executive Director) NOMINATING
Chin Sek Peng
Yang Zheng COMMITTEE
Li Lei
(Lead Independent Director)
Yang Zheng
Lau Ping Sum Pearce
BOARD OF (Independent Director) Wang Guannan

DIRECTORS Chin Sek Peng Lau Ping Sum Pearce (Chairman)

(Independent Director) Chin Sek Peng
Wang Dao Fu REMUNERATION
Li Lei
(Independent Director) COMMITTEE
Wang Guannan
Li Lei (Non-Executive and Non-
Wang Dao Fu
Independent Director)
Chin Sek Peng
Wang Guannan (Non-Executive
and Non-Independent Director) INDEPENDENT Yang Zheng

Chin Sek Peng (Chairman) COMMITTEE Lau Ping Sum Pearce

AUDIT Wang Dao Fu
Lau Ping Sum Pearce
COMMITTEE
Yang Zheng

COMPANY SECRETARY Ho Wui Mee Marian

DEPUTY SECRETARY Chew Bee Leng

BERMUDA RESIDENT
Ocorian Services (Bermuda) Limited Victoria Place, 5th Floor
REPRESENTATIVE 31 Victoria Street, Hamilton HM 10 Bermuda
AND ASSISTANT SECRETARY
PRINCIPAL PLACE OF No. 2111 Chengxin Avenue High-tech Industrial Park Jiangning District,
HEADQUARTERS Nanjing, Jiangsu, 211112 People’s Republic of China

REGISTERED OFFICE Victoria Place, 5th Floor 31 Victoria Street Hamilton HM 10 Bermuda

SINGAPORE SHARE In.Corp Corporate Services Pte. Ltd.

TRANSFER AGENT 30 Cecil Street #19-08 Prudential Tower Singapore 049712

BERMUDA SHARE REGISTRAR Ocorian Management (Bermuda) Limited

AND TRANSFER AGENT Victoria Place, 5th Floor 31 Victoria Street Hamilton HM 10 Bermuda

Deloitte & Touche LLP

Public Accountants and Chartered Accountants
AUDITORS 6 Shenton Way #33-00 OUE Downtown 2 Singapore 068809
Audit Partner: Toh Yew Kuan since financial year ended 31 December
2022
Bank of China
China Construction Bank Corporation
PRINCIPAL BANKERS China Minsheng Banking Corp., Ltd.
Guangdong Huaxing Bank Co., Ltd.

ANNUAL REPORT 2022 011

CHAIRMAN’S
STATEMENT

“The Group expects to continue

to execute the two-pronged
strategy that emphasises
the quality of development,
the holistic strategy to further
enhance profitability,
deploy the Mitigation Measures
and Differentiation Strategies,
and explore new opportunities.”

GUO HONG XIN

Non-Executive Chairman

DEAR FELLOW SHAREHOLDERS, Despite the Challenges, GI Business

Recorded a Resilient Performance with YoY
On behalf of the Board of Directors (the “Board”), I am pleased Growth in Cash Flow
to present to you our annual report for the financial year ended
31 December 2022 (“FY2022”). However, demand for industrial steam remained strong and
growing in FY2022 despite headwinds due to the continued
The Most Challenging Year Ever for ramp-up of GI projects and the resilience of customers. Total
Sunpower since the Inception of GI steam sales volume rose 9.5% YoY to 8.68 million tons.
Business
Based on Sunpower’s reliable business model and the efforts
FY2022 was the GI business’s first full year of operation that the disciplined management made to mitigate the impacts
following the disposal of the M&S business in May 2021. It was of the series of force majeure events, Sunpower achieved
also the most challenging year ever since the inception of the GI a resilient performance in FY2022 despite the challenges.
business due to the influence of several force majeure events. GI recurring revenue1 rose 38.9% YoY to RMB2.88 billion,
The pandemic broke out and spread through the country from faster than the growth in steam sales volume, mainly due to
the beginning of the year, culminating in the lifting of pandemic a significant rise in industrial steam price following the rise
control and prevention measures only at the end of the year. of feedstock prices. Further, GI project profitability improved
The geopolitical conflict which broke out in February set off a on the back of the strong demand for industrial steam,
global energy crisis and caused energy prices to soar globally, the execution of the price adjustment mechanism and the
impacting our production costs. Further, other related events Mitigation Measures2. GI recurring EBITDA3 rose 32.8% YoY to
including power curtailment due to extreme high temperature RMB598.0 million, while GI recurring PATMI4 grew 31.2% YoY
and the temporary adverse impact on the textile industry due to RMB158.2 million. Operating cash flow of the GI projects5
to US sanctions on Xinjiang cotton also affected the business rose 43.0% YoY to RMB364.1 million.
of certain customers in FY2022. As a result, the operations of
the GI projects and their customers were almost continuously At the Group level, revenue from continuing operations rose
affected throughout the year. 17.7% YoY to RMB3.45 billion in FY2022 due to the continued

1 Please refer to Footnote 1 on Page 8 of the 2022 Annual Report for the definition of GI recurring revenue.
2 Please refer to Footnote 1 on Page 6 of the 2022 Annual Report for the definition of Mitigation Measures.
3 Please refer to Footnote 3 on Page 8 of the 2022 Annual Report for the definition of GI recurring EBITDA.
4 Please refer to Footnote 4 on Page 8 of the 2022 Annual Report for the definition of GI recurring PATMI.
5 Please refer to Footnote 5 on Page 8 of the 2022 Annual Report for the definition of GI operating cashflow.

012 SUNPOWER GROUP LTD.

CHAIRMAN’S
STATEMENT
ramp-up of the GI business and contributions from services for profitability, along with a diversified feedstock mix strategy that
BOT projects, including EPC services, which are provided by reduces raw material consumption cost.
the Group6. PATMI without the financial effects of Convertible
Bonds in FY2022 was RMB136.5 million, which reflects the Focused on Supporting and Improving
operating results of the Group. Shareholders’ Value in the Long Term

GI is of High Growth Potential, Driven by With the lifting of pandemic control and prevention measures
Continued Ramp-up and Expansion of and the expected improvement of the macro-environment
Existing GI Plants in the long term, Sunpower intends to continue to stay on
its development path that secures value for shareholders.
The Group’s current GI project portfolio of 10 projects The Group expects to continue to execute the two-pronged
in operation and 1 expected to start trial operation are strategy that emphasises the quality of development, the
strategically located across 11 industrial parks that either have holistic strategy to further enhance profitability; deploy the
strong economic viability in economically developed areas or Mitigation Measures and Differentiation Strategies; and explore
have industry clusters of excellence. new opportunities.

Our GI projects have exclusive concessions of typically 30 Proposed Extension of Convertible Bonds
years and extensive networks of pipelines that enhance de (“CB”) Maturity Date by Two Years
facto exclusivity. These projects are part of the key utility
generation infrastructure in industrial parks where steam is a Under the prevailing terms of the CB Purchase Agreement, the
non-discretionary input for the large and diversified customer maturity date of the CBs was elected by the Bondholders to be
base that provide basic essential products for the vast on or around 17 April 2023, which is the 15th business day after
domestic market of China. the date on which the audited financial statements for FY2022
are issued. Having evaluated the prevailing conditions and
As at early 2023, the overall pandemic situation has entered options, including the operational environment and the general
a low level7 and the Covid-19 virus has been classified as a economic conditions, the Board has proposed to extend the
normal seasonal flu by certain countries8. As a result, following CB maturity date by approximately two years to April 2025. If it
the resumption of work and production after the Spring is approved by shareholders, the extension of the CB maturity
Festival, the negative impact of the pandemic on the economy date will allow the Group to focus on growing its business and
has gradually subsided and China’s economy is showing to have time to strategise and explore options that are more
signs of recovery9. Following the 20th National Congress, the beneficial for the Group’s longer term financial health.
government is strongly determined to drive an economic
recovery with consumption as the main driver10. Appreciation

Barring unforeseen circumstances, the Company believes that Despite the challenging conditions, the Board has proposed
its proven business model and disciplined management, after a first and final dividend of S$0.0013 per share for FY2022,
having undergone various force majeure events, are expected following the M&S disposal dividend in 2021. This marks the
to set a strong foundation for future growth especially in 12th consecutive year that Sunpower has declared a dividend.
view of the tapering off of the pandemic and the improved
economic conditions in China, which the Company believes to On behalf of the Board, I would like to thank our shareholders,
be favourable to its business operations. customers, and business partners for your continued trust and
support. Sunpower Group is well positioned to realise growth
In addition, Sunpower has a price adjustment mechanism that potential, unlock potential value for our shareholders in the
applies to its industrial customers and the ability to require future, and prepare for the next chapter of development.
prepayment or payment within a certain period after use. It
also continuously implements technological transformation GUO HONG XIN
and upgrades to improve efficiency and further enhance Non-Executive Chairman

6 Recognised under IFRIC12 Service Concession Arrangements.

7 https://www.channelnewsasia.com/asia/china-says-covid-19-situation-low-level-after-chinese-new-year-holiday-3241321
8 https://www.moh.gov.sg/news-highlights/details/singapore-to-exit-acute-phase-of-pandemic
9 https://data.eastmoney.com/report/zw_macresearch.jshtml?encodeUrl=N4nbWaRYxZfSry3LhciaSNkbOiDYLI7s7YYAMkb0+JE=
10 https://www.globaltimes.cn/page/202301/1284379.shtml

ANNUAL REPORT 2022 013

BOARD OF DIRECTORS

Mr. Guo founded Sunpower in 1997 and is currently Non-Executive Chairman of

the Board. Before he founded Sunpower, Mr. Guo was a Lab Director at the Heat
Pipe Research Centre of Nanjing Chemical Institute and served as Director and
Deputy General Manager at Shengnuo Group from 1993 to 1997. Mr. Guo was Vice
Dean of Heat Pipe Technology Development Institute of Nanjing Tech University and
Deputy Director of the National Science and Technology Ministry Heat Pipe Technology
Promotion Centre from 1995 to 1997. Mr. Guo was appointed as independent non-
executive director of Genscript Biotech Corporation, a company listed on the Hong
Kong Stock Exchange, in 2015. In addition, Mr. Guo serves as a part-time instructor at
the MBA Education Center of Nanjing University and as Industry Professor and Specially
Mr. GUO HONG XIN Appointed Professor at Nanjing University of Technology. He was also appointed as
Tsinghua University EMBA Alumni Entrepreneur Mentor in 2017.
Founder,
Non-executive Chairman
Mr. Guo has received many awards and honours. He was awarded prizes in technological
progress by the Ministry of Education of the People’s Republic of China (“PRC”) in 1994,
the National Federation of Industry & Commerce and Jiangsu Province in 2009, and the
China Petroleum and Chemical Industry Federation in 2010. Mr. Guo was recognised as
“Great Contributor to Nanjing Science and Technology” in 2006 and was awarded the special
government allowance by the State Council of the PRC in 2012 for his outstanding contributions.
He was appointed Team Leader of the National Standardisation Technical Committee for heat
pipes in 2008. In 2011, Mr. Guo was awarded “Jiangsu Top 10 Outstanding Entrepreneurs” and
“Innovative Entrepreneurial Talents”; elected as the expert of “333 High Level Talents Training
Programme”; and engaged as the first batch of industry professor in Jiangsu Province. In 2015,
he was recognised for his scientific & technological innovation and entrepreneurial talent (known
as “Ten Thousand Talents Plan”) by the Ministry of Science and Technology of the PRC. Futher,
he was engaged as the third batch of industry professors in Jiangsu Province by the Science and
Technology Department and other departments. In 2016, he was awarded as the “Leading Talent of the
National Special Support Program for High-level Talents” by the Organization Department of the Central
Committee of the Communist Party of China and other departments. In addition, Mr. Guo was honoured
as Top Expert of Nanjing and appointed as Vice Mayor of science and technology by the government of
Changyi City, Shandong province, in 2017. He won the Ernst & Young Entrepreneur of the Year 2018TM
China and was honoured with the title of “Jiangsu Outstanding Entrepreneur” in 2019. In 2021, Mr. Guo
won the second prize of National Science and Technology Progress Award.

As part of the 100th anniversary of the founding of the Communist Party of China, Mr. Guo was awarded
the honorary title of “National Outstanding Communist Party Member” on 28 June 2021 in recognition of
his remarkable achievements and the outstanding track record of Sunpower of more than two decades.
Since the founding of Sunpower, Mr. Guo has been resolved to industrialise many scientific and technological
achievements, and has led the Group to follow the path of localised innovation based on the “industry-university-
research” cooperation model, along with sustainable development. Mr Guo led the company to promote
performance excellence and made unremitting efforts to support China’s output expansion and energy saving,
and circular economy development. In June 2022, Mr. Guo won the Nanjing Mayor Quality Individual Award.

Mr. Guo obtained his Bachelor’s degree in 1983 and a Ph.D in Geotechnical Engineering from the Cold and Arid
Regions Environmental and Engineering Research Institute of the Chinese Academy of Sciences in 2010. In 2014, he
obtained his EMBA from Tsinghua University.

014 SUNPOWER GROUP LTD.

BOARD OF DIRECTORS

Mr. Ma joined Sunpower in 1997 as the Company’s co-founder and served

as Deputy General Manager. Through the various stages of the Company’s
development, he was responsible for marketing, sales, production, procurement,
finance and investment, among others. He was appointed as Executive Director
of the Group in 2004, overseeing finance, investments, mergers & acquisitions,
investor relations, and spearheading the work on Sunpower’s IPO on the Singapore
Exchange. Mr. Ma has been appointed as the Chief Executive Officer of the Company
with effect from 11 August 2021.

In 2008, Mr. Ma was entrusted with the responsibility for overall management and
operational development of the Group. Mr Ma drove the formulation and implementation
Mr. MA MING of strategic planning and comprehensive budget management for the Group, pushed
Co-Founder
forward the institutionalisation and refinement of corporate management, and propelled
Executive Director
the internationalisation of the business and diversification of coverage of industries to attain
CEO
long-term sustainable development of the Group.

Since the strategic expansion of the Group into the GI Business in 2015, Mr. Ma has led the
formulation of the strategic plan and business model and is responsible for the implementation
of its long-term objectives. He takes charge of the entire business development cycle including
market research and development, project investment and financing, project implementation,
development and construction, as well as post-investment operational management. Mr. Ma
has led the establishment of professional management systems and teams and has managed
the GI Business segment to its current healthy stage of development where it is able to function
autonomously within a complete system.

Before co-founding Sunpower, Mr. Ma worked in Nanjing Chemical Industrial Company. In 1992, he
founded Hainan Lida Industrial and served as General Manager of that company. Mr. Ma graduated from
Nanjing Chemical Engineering Senior College in 1983 and obtained his Master’s degree in Engineering
Management from the University of Shanghai for Science and Technology.

Mr. Lau has been an Independent Non-Executive Director since

February 2005 and was last re-elected on 24 June 2020. Mr. Lau was
a Member of Parliament for Yio Chu Kang Constituency from 1980 to
1991 and a Member of Parliament for Ang Mo Kio Group Representation
Constituency from 1991 to 1996. He served as a Director of Ang Mo Kio
Community Hospital from 1993 to 1999 and Chairman of the Medifund
Committee of the hospital from 2001 to 2005. He was Head of Computer
Services in a statutory board and two local banks from 1973 to 1996. He
was the General Manager of NTUC Link Pte Ltd. between 1997 and 2000
and was the Executive Director of People’s Action Party/PAP Community
Foundation from 2001 to 2012. He is currently an Independent Director of two
other listed companies in Singapore and a member of the Singapore Institute of Mr. LAU PING SUM PEARCE
Directors. In addition, he is Chairman of the Programme Advisory Committee for Independent Director
BA Translation and Interpretation and an examiner for Certification Examination
for Professional Interpreters, School of Humanities & Behavioural Sciences,
Singapore University of Social Sciences. He is also adjunct Professor of Translation
and Interpretation. Mr. Lau graduated from the Australian National University with a
Degree in Economics and also holds a Diploma in Business Administration from the
University of Singapore.

ANNUAL REPORT 2022 015

BOARD OF DIRECTORS

Mr. Chin was appointed as an Independent Non-Executive Director in February

2005 and was last re-elected on 28 April 2022. He was the Managing Partner
responsible for running, managing and growing the professional services of PKF
Singapore entities including PKF-CAP LLP, a firm of chartered accountants in
Singapore from 2017 to 2020. With effect from 1 January 2021, he was appointed
the Executive Chairman of PKF Singapore entities. Mr. Chin is also the co-founding
Director of PKF-CAP Advisory Partners Pte Ltd and the Head of Risk Consulting
division of PKF in Singapore.

Mr. Chin started his accountancy and audit training in Casson Beckman, a medium
sized firm of chartered accountants in London in 1980. After he qualified as a chartered
Mr. CHIN SEK PENG accountant in 1983, he joined legacy Price Waterhouse and worked in UK, Europe and
Independent Director Singapore from 1983 to 1994. In 1994, Mr. Chin joined the Institute of Singapore Chartered
Accountants (“ISCA”) as the first Practice Review Director. In 1999, Mr. Chin joined Arthur
Andersen as a partner in its Assurance and Business Advisory Division and he left the firm in
2002 to set up his own audit and consultancy practices.

Mr. Chin holds a Bachelor of Arts (Honours) degree in Accounting and Finance from Lancaster
University in the United Kingdom and is a public accountant, Fellow Chartered Accountant
(practising) of Singapore and a Fellow Member and Business and Finance Professional of the
Institute of Chartered Accountants in England and Wales. He is a member of the Institute of
Internal Auditors of Singapore and an ordinary member of the Singapore Institute of Directors.

Mr. Chin also serves as Independent Director, mainly in the capacity of Audit Committee Chairman,
of one other company listed on the Singapore Exchange. He was a member of the PKF International
Asia Pacific Board and Chairman of the ASEAN sub-region from 2019 to 2021 and was formerly a
council member of ISCA and the Chairman of the Public Accounting Practice Committee of ISCA.

Mr. Yang was appointed as an Independent Non-Executive Director

in November 2017 and was last re-elected on 28 April 2021. He was
appointed as Lead Independent Director of the Group on 25 June 2019.
He is a PRC Certified Public Accountant (CPA), a senior member of the
Chinese Institute of Certified Public Accountants (CICPA), a director of the
Accounting Society of China (ASC), a member of the First National Audit
Information and Standardisation Technical Committee and President of
Shenzhen Rihao Financial Intelligence Research Institute. Mr. Yang has been
an accounting teacher at Nanjing Audit University since 1987 and was the
Dean of the School of Accounting at Nanjing Audit University. He was a part-
time Professor at Curtin University of Australia and served as Vice-President
of Xi’an Eurasia University from 2014 to 2018. Mr. Yang has also served as an Mr. YANG ZHENG
independent director in a number of companies and is currently an independent Lead Independent Director
director of the following listed companies: Luenmei Quantum Co., Ltd., Anhui
Xinke New Materials Co., Ltd., Meig Smart Technology Co., Ltd., and Svg Group
Co., Ltd.. Mr. Yang graduated with a Bachelor’s degree in Economics from Anhui
University in 1982. He studied as a visiting scholar in the field of auditing in Nanjing
University from 1994 to 1995.

016 SUNPOWER GROUP LTD.

BOARD OF DIRECTORS

Mr. Li was appointed as a Non-Executive Director in March

2017 and was last re-elected on 24 June 2020. He worked in
McKinsey & Company’s Beijing Office as an Analyst from 2006
to 2007. Mr. Li was Vice President of Beijing Dinghui Venture
Investment Advisory Co., Ltd., from 2007 to 2011 and Executive
Director of Dinghui Equity Investment Management (Tianjin)
Co., Ltd., from 2011 to 2015. Mr. Li has served as the Managing
Director of CDH Investments Management (Hong Kong) Limited
since January 2016. Mr. Li holds two Bachelor’s Degrees in law and
economics and a Master’s Degree in law.
Mr. LI LEI
Non-Executive, Non-Independent Director

Mr. Wang was appointed as an Independent Director on 25 June

2019 and was last re-elected on 28 April 2021. He graduated
with a Bachelor of Law degree from Peking University in 1984.
From August 1993 till May 2002, he worked with many established
Singapore law firms as their Chinese Legal Counsel. Mr. Wang then
set up Shanghai Yuantai Law Offices in 2004 and is the firm’s founding
partner. He has more than 30 years of PRC legal practice experience
in a wide range of areas, including capital markets, corporate finance
and mergers & acquisitions. Mr. Wang currently serves as a director of
Matex International Limited, Proceq Trading (Shanghai) Co. Ltd (China)
and MOBO Information Technology Pte Ltd..
Mr. WANG DAO FU
Independent Director

Ms. Wang is a Director at DCP, where she was actively

involved in several equity investment deals. Prior to DCP, Ms.
Wang was an Analyst at Hony Capital from June 2021 to June
2014 and Senior Associate at MBK Partners from June 2014 to
June 2018. Ms. Wang graduated from Massachusetts Institute of
Technology with a Master in Finance and Peking University with a
Bachelor of Engineering and Economics.

Ms. WANG GUANNAN

Non-Executive, Non-Independent Director

ANNUAL REPORT 2022 017

KEY MANAGEMENT
Mr. TANG HAO Mr. SHA JIAN HUA Mr. SHI SHAO LIN
Group Vice President and General Manager of Deputy General Manager of Jiangsu Sunpower Group Financial Director and Deputy General
Jiangsu Sunpower Clean Energy Co., Ltd. Clean Energy Co., Ltd. Manager of Jiangsu Sunpower Clean Energy Co., Ltd.

Mr. Tang joined the Group in April 2017 to serve the GI Mr. Sha joined Sunpower Group in March 2017 Mr. Shi joined the Group in July 2018 and currently
Business. Since 2017, Mr. Tang has served in several and currently serves as Deputy General Manager serves as Group Financial Director and Deputy
roles within Jiangsu Sunpower Clean Energy Co., Ltd.,
of Jiangsu Sunpower Clean Energy Co., Ltd.. General Manager of Jiangsu Sunpower Clean
including Assistant to General Manager, Director of
Project Support Department, Director of Investment Since 2018, he has been also serving as General Energy Co., Ltd.. Mr. Shi started his career in 1995
Development Department, Deputy General Manager Manager of Zhangjiagang Yongxing Thermal Power and has decades of experience of financial work
and General Manager. He is currently Group Vice Co., Ltd., Jiangsu Sunpower Electricity Sales Co., in diverse industries. From 1995 to 2014, Mr. Shi
President and General Manager of Jiangsu Sunpower Ltd. and Changshu Suyuan Thermal Power Co., worked as Deputy General Manager and Financial
Clean Energy Co., Ltd..
Ltd. to enhance the post-investment operation of Director of Jiangxi Electric Power Fuel Co., Ltd.,
Prior to joining the Group, Mr. Tang worked for BR the Group’s project companies. Mr. Sha started Financial Director of Jiangxi Sanhe Electric Power
Energy Environment Engineering Co., Ltd. as Deputy his career from 1986 and has been working in Co., Ltd. and Chief of Financial Section of Jiangkou
Director of Regional Investment and Deputy Manager the electric power and thermal power industry for Waterpower Factory. From 2014 to 2016, Mr. Shi was
of Platform Support Department. From 2010 to 2014,
decades. From 1986 to 2008, he served in several Deputy Director of Finance Department of China
he held various positions at Hangzhou Environment
Group Co., Ltd., including Deputy Manager. From power plants and thermal power companies, and Power Investment Corporation International Mining
2014 to 2016, he worked at Huadian Electric Power was responsible for operation, business planning, Co., Ltd.. From 2016 to 2017, he worked in State
Research Institute as Regional Project Manager of production, etc. From 2008 to 2016, he worked as Power Investment Corporation Limited as Assistant
Environmental Technology Department. General Manager of Jiangsu Huaxia Environmental to General Manager of Xi’an Branch of State Power
Protection Energy Sources Co., Ltd., Jiangsu Investment Corporation Logistics Co., Ltd. and as
Mr. Tang graduated from Huazhong University of
Science and Technology and obtained a bachelor’s Skyrun International Group Co., Ltd. and Caoxian Deputy Director of Finance Department (in charge
degree and a master’s degree in environmental Huaheng Thermal Power Co., Ltd.. From 2016 to of the financial work) of State Power Investment
engineering respectively in 2005 and 2007, 2017, he served as Director of Strategic Investment Corporation Guangdong Power Co., Ltd.
respectively. From 2010 to 2013, he published four
Department of BR Energy Environment Engineering
professional papers, all of which were included in
the Chinese core journal of science and technology Co., Ltd..
titled “Environmental Sanitation Engineering”.

Ms. WANG HUI Mr. ZHENG XIAO DONG Mr. XU JUN Mr. WANG NING
Chief Financial Officer Deputy General Manager and Director of Deputy Chief Engineer and Deputy Assistant to the General
Engineering Construction Management Department General Manager of Jiangsu Manager of Jiangsu Sunpower
of Jiangsu Sunpower Clean Energy Co., Ltd. Sunpower Clean Energy Co., Ltd. Clean Energy Co., Ltd.

Ms. Wang joined Sunpower Group Mr. Zheng joined Sunpower Group in July 2019 Mr. Xu is concurrently the Deputy Mr. Wang is currently the Assistant
in June 2016 as a Senior Financial to serve the GI Business. He is currently Deputy Chief Engineer and the Assistant to the General Manager of Jiangsu
Analysis Manager. She is currently General Manager and Director of Engineering to the General Manager of Jiangsu Sunpower Clean Energy Co., Ltd..
the Group’s Chief Financial Construction Management Department of Sunpower Clean Energy Co., Ltd..

Officer and is responsible for Jiangsu Sunpower Clean Energy Co., Ltd.. Mr. Wang studied at Nanjing
Mr. Zheng started his career in 1992 and once Mr. Xu has decades of
the Group’s overall financial University of Aeronautics and
worked in CSEEC and Zhejiang Bochen Huineng professional work experience in
management and reporting. Prior Astronautics from 2002 to 2004,
Technology Co., Ltd. as Assistant to President and the thermoelectric industry since
to joining Sunpower Group, she joining in 1999. He worked as Chief and graduated with his master
Deputy General Manager respectively. From 2004
was a Senior Auditor with Ernst Engineer in Reang Eco-Energy degree from City, University of
to 2014, he served as Chief Engineer and General
& Young from September 2011 to Co., Ltd. and Assistant General London in 2007. He pursued
Manager of Hangzhou Bluesky Natural Gas Power
May 2016. Ms. Wang graduated Manager in Hunan Yongxing his MBA from 2014 to 2017 in
Generation Co., Ltd., and as Chief Engineer and
from Soochow University with a Comprehensive Utilisation Power University of La Verne. Mr. Wang
Deputy General Manager of Amber International
bachelor’s degree in management Plant. He also served in Hunan had working experience in China
Investment Co., Ltd. and Amber Energy. From
in June 2011. Zixing Coking Power Co., Ltd.. Telecom and GCL as engineer
2001 to 2004, he worked in GCL Group as
Manager and Director of the Power Generation and project manager. He joined
Mr. Xu graduated from Hunan
Department of Dongtai Suzhong Environmental Sunpower Group in 2017 as
Water Resources and Electric
Protection and Thermoelectricity Co., Ltd. and a senior investment analysis
Power School (now Changsha
Deputy Chief Engineer of Hangzhou Office of GCL University of Science and manager and now is responsible
Group. From 1992 to 2001, he served in Nanjing Technology) majoring in power for investment and operation
Port Administration Bureau and Dongtai Thermal plants and power systems. In May work.
Power Plant. Mr. Zheng graduated from Nantong 2018, he was appointed by Hunan
Textile Engineering Institute in 1992 and graduated University of Humanities, Science
with a major in Electrical Power Engineering and and Technology as an off-campus
Automation from Hohai University in 2003. tutor for postgraduate students.

018 SUNPOWER GROUP LTD.

CORPORATE STRUCTURE

100% 100%

Sunpower International Holding

Sun Superior Holding Pte. Ltd.
(Singapore) Pte. Ltd.

100% 100% 100% 100%

Jiangsu Sunpower Clean

Jiangsu Sunpower Machinery Jiangsu Sunpower Smart Sunpower Clean Energy
Energy Research Institure
Manufacture Co., Ltd. Energy Co., Ltd. Investment (Jiangsu) Co., Ltd.
Co., Ltd.

100%

Jiangsu Sunpower
Clean Energy Co.,
Ltd.

100% 51% 85% 90% 51%

Gaoyang Hebei Changrun Shantou

Qingdao Xinyuan Changshu Suyuan Lianshui Sunpower 44%
Changrun 100% Environmental Sunpower Keying
Thermal Power Thermal Power Clean Energy Co.,
Heat Supply Technology Thermal Power
Co., Ltd. Co., Ltd. Ltd.
Co., Ltd. Co., Ltd. Co., Ltd.

100% 86.5% 100% 49% 100%

Suzhou Jining Mining

Green Bright 28%
Zhangjiagang Xintai Zhengda Quanjiao Sunpower Industry Sunpower Xinjiang Sunpower
Renewable Yongxing Thermal Thermoelectric Clean Energy Co., Clean Energy Clean Energy
Energy Power Co., Ltd. Co., Ltd. Ltd. Development Co., Ltd.
Co., Ltd. Co., Ltd.

60% 40% 100% 100% 70% 100% 100%

Suzhou Sunpower
Jiangsu Sunpower Tongling Wuhu Sunpower Fuzhou Sunpower
Qingdao Sunpower Smart New
Electricity Sales Sunpower Clean Clean Energy Jiaoneng Thermal
Thermal Co., Ltd Energy
Co., Ltd. Energy Co., Ltd. Co., Ltd. Power Co., Ltd
Co., Ltd

100% 100% 100% 100% 100% 100% 100% 51%

Changle Yueyang Dingyuan Ruijin Yihuang Changyi Xuzhou Zhoukou

Sunpower Sunpower Sunpower Sunpower Sunpower Sunpower Sunpower Sunpower
Clean Energy Clean Energy Clean Energy Clean Energy Clean Energy Clean Energy Clean Energy Clean Energy
Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd.

100%

Xuzhou
Sunpower
Thermal
Power Co.,
Ltd.

ANNUAL REPORT 2022 019

SUSTAINABILITY REPORT SUMMARY
Applying the circular economy model, Sunpower provides clean industrial steam to enterprises, civil heating to households,
electricity to the State Grid as well as industrial services to its users. The Company is committed to “benefit-oriented environmental
protection” and promotes a green and harmonious ecology, while enhancing people’s livelihoods and the well-being of society.
The 2022 Sustainability Report highlights Environmental, Social and Governance (“ESG”) risks and opportunities, performance
and achievements based on the material topics. It is prepared in accordance with the Global Reporting Initiative (“GRI”) Standards
for the period of 1 January 2022 to 31 December 2022 (“FY2022”). This report is available for download on SGXNet (www.sgx.
com) and the investor relations website of Sunpower Group (http://sunpower.listedcompany.com/) after disclosure.

ENVIRONMENT
The Company strictly abides by the environmental laws and regulations of the People’s Republic of China, such as the
Environmental Protection Law, the Prevention and Control of Air Pollution Law, and the Water Pollution Prevention and Control
Law. Sunpower continuously improves its environmental management system, including the Environmental Policy, Environmental
Protection Management System, and Measures for “Three Simultaneities” of Construction Projects. In FY2022, the Company
invested approximately RMB 3.78 million in environmental management.

The Company has developed a comprehensive plan to conserve energy and reduce emissions, which involves promoting
circular economy and achieving material recycling and multi-level energy utilisation. To improve energy utilisation efficiency,
the Company utilises energy saving technology, environmental protection technology, and long-distance steam distribution
pipelines technology to carry out energy-saving transformations on projects. For instance, the Xintai Zhengda Project conducted
a heat pump transformation that utilised small temperature differences of circulating water to promote waste heat recovery.
This resulted in improvement in capability to supply steam, contributing to energy conservation and emission reduction.
Additionally, the Changrun Project harnessed waste heat from wastewater desulfurisation using the low heat of wastewater
to conserve feedstock resources. The Yongxing and Suyuan Projects also conducted transformations in their circulating water
pump techniques, resulting in a significant reduction in water consumption and improved energy utilisation rates. In FY2022, the
Company’s total energy consumption amounted to 1,161,900 metric tons of standard coal, and the energy consumption density
was 3.54 metric tons of standard coal/RMB 10,000.

In terms of project construction, Sunpower takes measures to enhance management of construction sites, such as regularly
inspecting and controlling dust, noise, water pollution, and environmental protection. This helps Sunpower to prevent and
reduce pollution problems caused by project construction. The Company strengthens waste management and strictly follows
the Law of the People’s Republic of China on the Prevention and Control of Environment Pollution Caused by Solid Wastes,
the Measures for the Transfer of Hazardous Wastes, the Standard for Pollution Control on Hazardous Waste Storage, and
other laws, regulations, and standards. Sunpower has established the Management System of Hazardous Waste to standardise
waste disposal management. For non-hazardous wastes such as construction waste, furnace ash, and cinder, the Company
recovers or reuses resources as much as possible, and consumes and absorbs all solid wastes according to regulations. For
hazardous wastes, an independent hazardous waste storage warehouse has been established and professional institutions
are entrusted to dispose of them. The Company comprehensively utilises hazardous wastes to the maximum extent, including
catalyst regeneration and waste oil recovery, in line with the requirements of “reduction and recycling”. In FY2022, the Company
emitted 213.76 metric tons of sulfur oxides, 529.57 metric tons of nitrogen oxides, 53.34 metric tons of dust, and 14.68 metric
tons of particulate matter. Non-hazardous waste emissions were 459,385.91 metric tons, and sewage discharge was 817,100
metric tons.

Further, GI projects’ centralised steam supply provides comprehensive solutions to reduce water, land and air pollution, helping
to establish a sustainable ecological system. One of the main sources of pollution in the industrial parks is wastewater which
contains organic substances that do not decompose easily and soluble inorganic substances and toxic heavy metals that make
treatment difficult.1 In response, GI projects use wastewater and river water after treatment for production, reduce sewage
discharge and thus make more efficient use of water resources. Changrun, Yongxing and Shantou Projects are typical examples.
In addition, GI projects alleviate local water body pollution problems. As a part of the No.1 Lianjiang River Comprehensive
Remediation Project, Shantou Project supplies centralised steam and helps to relocate 183 textile enterprises along the Lianjiang
River to the industrial park. As a result, sewage discharge into the river was alleviated and the black Lianjiang River was turned
to be clean. Besides, the textile enterprises which were once closed due to pollution now can resume and continue operations.
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20 SUNPOWER GROUP LTD.

SUSTAINABILITY REPORT SUMMARY
Besides, the treatment of wastewater generates sludge that are usually disposed of through landfills, which poses a major
environmental and health hazard2. However, GI projects such as Changrun Project collect and dry the sludge for blended
feedstock combustion, and subsequently turn production wastes such as fly ash into valuable raw materials that can be sold to
downstream plants. This method treats land-based pollution at the source and restores the land eco-system.

In addition to sludge, GI projects such as Yongxing’s JV plant (which is under construction) collect and treat solid waste in the
industrial parks and use them as substitute feedstocks. Tongshan Project also uses biomass such as bark, straw and other
agricultural product waste as a fuel source. By turning waste into useful “treasure”, GI projects provide a solution to recycle and
reduce the amount of solid waste that would otherwise pollute the land-based environment.

Finally, GI projects have contributed to the shutdown of hundreds of small dirty boilers and reduced emissions of air pollutants.
The application of environmental protection technologies and an online 24-hour emission monitoring system that allow GI project
emissions to be capable of meeting or be even lower than the emission standard of natural gas are Sunpower’s practical actions
that improve the atmospheric environment, true to the call of China’s Blue Sky Project.

The Company is committed to actively responding to climate change and reducing greenhouse gas emissions through a
transformation process that involves “promoting self-emission reduction, serving social low-carbon development, and promoting
green technology practice and application”. This process encompasses energy structure transformation, system energy efficiency
improvement, and the adoption of green technology. In addition to promoting its own low-carbon transformation, the Company
is also providing customers with lower-carbon and cleaner products and services. Furthermore, the Company is building a safe
and efficient energy system, and conducting carbon emission rights check, inspection, monitoring, quota calculation, contract
execution, and trading in operational projects to reduce carbon emission. As a result of these efforts, the Company’s total
greenhouse gas emissions in FY2022 amounted to 3,275,500 metric tons of carbon dioxide equivalent, with a greenhouse gas
emission density of 9.98 metric tons of carbon dioxide equivalent/RMB 10,000.

As an early adopter of the circular economy production model, Sunpower is one of the core driving forces of circular economy
industrial parks. It realises ultra-low emissions that earn more emission credits for the parks which, in turn, helps to attract more
enterprises for relocation. This enables a mutually sustainable development and establishes a win-win relationship.

QUALITY MANAGEMENT AND CUSTOMER SERVICE

The Company continuously improves its quality management system by formulating the Heating Network Management System,
among other operational regulations, processes and systems. It has established detailed professional equipment files to ensure
the stable operation of production equipment. Additionally, Sunpower uses emergency power supply to ensure the safe shutdown
of the power plant during accidents, and quickly resumes generator operation after the fault is resolved. Moreover, it creates
emergency plans and makes technical improvements based on the operation modes and conditions of different power plants to
ensure a stable energy supply. The Company also adjusts steam pressure and temperature according to customer requirements
to provide on-demand heating and precise heating.

In order to improve customer service efficiency, the Company has provided all-round customer services and established an
integrated platform that includes an all-weather hotline and helps to handle complaints. This platform ensures that customer
complaints and other issues are handled professionally, fairly, timely, and with a sense of responsibility. Moreover, the Company
has implemented user satisfaction return visits and conducts regular door-to-door surveys to monitor customer satisfaction. It is
worth noting that in FY2022, the Company received zero complaints regarding its product quality not meeting user requirements.

HEALTH AND SAFETY

Sunpower is committed to creating a safe environment with the stable operation of facilities such as boilers. GI projects have
remote monitoring systems that ensure boiler operations are kept under control at all times and conduct facility maintenance
and upgrades from time to time to enhance the safe operation of boilers. This helps to reduce potential injury risks and ensure
operational security.

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ANNUAL REPORT 2022 21

SUSTAINABILITY REPORT SUMMARY
The Company is fully committed to complying with relevant employment safety laws and regulations of the People’s Republic
of China, such as the Work Safety Law, the Administrative Regulations on the Work Safety of Construction Projects, the
Regulation on Work Safety Licences, and the Law on the Prevention and Control of Occupational Diseases. To further reinforce
its safety management efforts, the Company has established several regulations, including the Administration System of Safety
Standardisation Building Efforts, Measures on Potential Safety Threat Management and Investigation, Regulation on Occupational
Health and Safety, and Regulation on Labor Protection Supplies Management. These measures reinforce safety efforts, enhance
safety management measures, and foster a culture of safety. As a result, the Company successfully achieved its goal of zero
personal, equipment, or fire accidents throughout FY2022, demonstrating its unwavering commitment to safe production.

The Company implements safe production standardisation and improves its standardised management and operational
capabilities. Regular occupational health and safety inspections are conducted, and preventative measures such as the “four
summer preventions” and protection against cold and freezing conditions in winter are implemented. Sunpower proactively
identifies and eliminates potential safety hazards, while strengthening its safety risk management and control. Emergency plans
for production safety accidents are established, safety emergency drills are organised, and emergency response capabilities are
enhanced. Moreover, the Company conducts annual occupational hazard factor detection and investigates potential threats to
employees’ occupational health at production sites. Any identified issues are promptly addressed through corrective actions. As
a result of these efforts, no occupational diseases were reported by the Company in FY2022.

The Company prioritises safety culture by implementing safety education and training plans to enhance employee safety
awareness and operational skills. It also conducts various cultural activities, including “Safety Culture Grows in Teams and
Groups”, “Safety Production Month”, and “Safety Warning Week”, to establish a safe working environment. In FY2022, the
Company held occupational health and safety training sessions with an attendance of 9,220 employees. Furthermore, a total
of 5,682 test attempts were made for the occupational health and safety exam, and all employees who took the exam passed.
Changrun Project received the “Best Enterprise in Occupational Health” award in Hebei Province in FY2022. Suyuan Project,
Xintai Zhengda Project, Changrun Project and Xinyuan Project were rated as “Power Safety and Production Standardisation
Enterprise (Level 2)”.

TALENT DEVELOPMENT AND COMMUNITY CONTRIBUTION

The Company has developed a comprehensive training system that caters to employees at all levels, including high-level, middle-
level, and junior-level staff. The training programme is designed to improve employees’ vocational skills, professional techniques
and management abilities. The courses and lecturers are continuously evaluated and updated to enhance the employees’ skills.
To cater to the different needs of new employees, operational positions, and technical positions, the Company has formulated
specific training plans. Sunpower carries out both routine and special training to improve employees’ technical abilities, and
offers training for technicians to obtain external qualifications. The training method for external qualification is chosen based on
industry policy changes, technological advancements, and management improvements. For example, employees can access
on-demand knowledge via official WeChat accounts and take video lectures online. In FY2022, the Company organised 991
training sessions, with 1,000 people receiving training. The total training hours reached 29,446, with an average of 29.45 hours
per person.

Further, GI projects facilitate the local employment as the indispensable motivator for the continuous development of local
industries and enterprises. With Changrun Project’s centralised supply of steam, local textile enterprises that used to be pollutive
now can continue operations in a green and efficient way. This further enhanced sustainable industry growth and promoted local
employment3 of over 100 thousand people in Gaoyang County, Hebei Province.

Besides, the Company actively engages in industry-university-research cooperation, and has established long-term and stable
partnerships with universities and colleges. In FY2022, Sunpower Group was recognised by one university as an “Off-campus
Practical Education Base” and was awarded with a nameplate.

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22 SUNPOWER GROUP LTD.

SUSTAINABILITY REPORT SUMMARY
In addition, GI projects satisfy the fundamental needs of local residents and ensure the local livelihood. Three GI projects
(Xinyuan Plant, Xintai Zhengda Project, and Tongshan Project) supply clean affordable civil heating to the local residents within
their coverage areas and help to keep local residents warm during the harsh winter when temperatures can fall substantially to
-20℃ to -30℃.

Finally, Sunpower also cultivates a win-win and friendly relationship with other stakeholders such as suppliers and banks and is
dedicated to public welfare efforts, including support for socially disadvantaged groups, care for the elderly who live alone and
left-behind children, and assistance for impoverished students. Additionally, Sunpower has contributed to the fight against the
pandemic and engaged in charitable activities across various fields, such as donations to education and care for the elderly,
to demonstrate its corporate social responsibility. In FY2022, Sunpower invested in public welfare initiatives and employees
participated in 502 hours of volunteer activities.

GOVERNANCE
Sunpower has in place a set of self-regulating and monitoring mechanisms, in accordance with the Code of Corporate Governance
2018 issued by the Monetary Authority of Singapore.

In addition to regular committees, Sunpower has a series of committees such as the Risk Management Committee and the
Sustainability Development Committee to better conduct effective corporate governance. For further information, please refer to
the “Corporate Governance” section of 2022 Annual Report.

To strengthen its risk management processes and framework, the Risk Management Committee is established to evaluate
and provide advice on the business risks (strategic, financial, operational and compliance with laws and regulations); study and
identify internal controls and risk management strategies to manage the identified risks; design and implement new controls
and strategies to address identified business risks; study and analyse material investments, financing and other operational
management activities, etc.

To implement ESG at all levels, the Sustainability

Development Committee has been established Board of Directors
under the Board of Directors and is composed
of company directors and senior management.
Subsequently, the Sustainable Development Team,
comprising senior management and heads of
Sustainability Development Committee
various functional departments, breaks down the
overall strategy into individual employee tasks and
measures. Sustainable Development Team

Through refined corporate governance mechanisms

implemented through all the levels, Sunpower aims
to safeguard against fraud, protect shareholders’ Operations HSE Human Internal
interests, and secure its long-term, high-quality Management Management Resources Control
Department Department Department Department
success.

In conclusion, Sunpower applies the principle of benefit-driven environmental protection, and strives for the noble synergistic
effects of economic development and sustainable development. Sunpower aims to safeguard the common future and welfare of
its stakeholders, and realise long-term and sustainable values for its shareholders.

ANNUAL REPORT 2022 23

CORPORATE
GOVERNANCE REPORT
The board (the “Board”) of directors (“Directors”) and management (“Management”) of Sunpower Group Ltd. (the “Company”,
and together with its subsidiaries, the “Group”) are committed to upholding a high standard of corporate governance, including
accountability, transparency and sustainability, in order to safeguard the interests of all stakeholders and to promote investors’
confidence. To this end, the Board has in place a set of self-regulating and monitoring mechanisms, in accordance with the Code
of Corporate Governance 2018 (the “Code”) issued by the Monetary Authority of Singapore.

This report describes the Company’s key corporate governance processes and practices with specific references to the Code.

1. BOARD MATTERS

The Board’s Conduct of Affairs

Principle 1: The Company is headed by an effective Board which is collectively responsible and works with Management
for the long-term success of the Company

(i) Apart from its statutory duties and responsibilities, the Board oversees the Management and affairs of the Group. It
focuses on strategies and policies, with particular attention paid to growth and financial performance. In addition,
the Board has adopted a set of internal guidelines setting forth matters that require the Board’s prior approval. The
Board is responsible for decisions over matters involving, among other things, conflicts of interest of a substantial
shareholder or a Director, approving annual budgets, financial plans, financial statements, business strategies
and material transactions such as major acquisitions, divestments, interested person transactions, funding and
investment proposals as well as corporate or financial restructuring, share issuance, declaration of dividends and
other permitted returns to shareholders. The Group has put in place financial authorisation and approval limits for
operating expenditure and procurement of goods and services. It delegates the formulation of business policies and
day-to-day management to the Executive Directors and its management team.

The principal functions of the Board are to:

(a) provide entrepreneurial leadership, review and approve the Group’s key business strategies and financial
objectives, including major investments and divestments and financing of projects;

(b) oversee the processes for evaluating the adequacy of internal controls, risk management, financial reporting and
compliance with regulatory authorities and the Group’s internal control policies and procedures to safeguard
the shareholders’ interests and the Company’s assets;

(c) review the performance of the Management;

(d) identify key stakeholder groups and recognise that their perceptions could affect the Company’s reputation;

(e) set the Company’s values and standards (including ethical standards), and ensure that obligations to
shareholders and other stakeholders are understood and met; and

(f) consider sustainability issues, e.g. environmental and social factors, as part of its strategic formulation.

(ii) All Directors act objectively to discharge their duties and responsibilities at all times as fiduciaries in the best interests
of the Company.

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GOVERNANCE REPORT
(iii) The Board discharges its responsibilities either directly or indirectly through various Board committees. These
committees (“Board Committees”) include the Nominating Committee (“NC”), Remuneration Committee (“RC”) and
Audit Committee (“AC”). Each of the Board Committees functions within its terms of reference. If authority to make
decisions on certain board matters is delegated by the Board to any Board Committee, such delegation would be
disclosed.

(iv) The Board has also established a risk management committee (“RMC”) to assist the Board on the governance of risk.
The membership and key functions of the RMC are set out in the later section of this report.

(v) The Board has also established an independent committee (“IC”) to assist the Board to review and approve Interested
Person Transactions (the “IPTs”) with Mandated Interested Persons (as defined below) (“Mandated Transactions”)
in accordance with the procedures under the IPT Mandate (as defined in the Company’s circular to its shareholders
dated 31 March 2021).

(vi) The Board meets once a year to review and deliberate on the key activities and business strategies of the Group. The
Board meets at least four (4) times a year to approve the release of the financial results for the first and third quarters,
half-year and full-year. Additional meetings of the Board will be held where circumstances require. The Company’s
Bye-Laws allow a Board meeting to be conducted by way of teleconference and video-conference.

(vii) The Board, with the concurrence of the NC, is of the view that the Directors have attended and actively participated
in Board and Board Committee meetings, and that each Director has ensured that sufficient time and attention have
been given to the affairs of the Group in the financial year ended 31 December 2022 (“FY2022”). The following table
discloses the number of meetings held by the Board and Board Committees and the attendance of all Directors in
FY2022:

Board AC NC RC

Number* Attended* Number* Attended* Number* Attended* Number* Attended*

Guo Hong Xin 4 4 N/A N/A 1 1 N/A N/A

Ma Ming 4 4 N/A N/A N/A N/A N/A N/A
Lau Ping Sum Pearce 4 4 4 4 1 1 1 1
Chin Sek Peng 4 4 4 4 1 1 1 1
Li Lei 4 4 N/A N/A 1 1 1 1
Liu Haifeng David(1) 1 0 N/A N/A 1 0 1 0
Yang Zheng 4 4 4 4 1 1 N/A N/A
Wang Dao Fu 4 4 N/A N/A 1 1 1 1
Wang Guannan (2)
3 3 N/A N/A 0 0 0 0

* Refer to meeting held and attended while each Director was in office.
(1) Mr Liu Haifeng David resigned as a Director and ceased to be a member of the NC, and a member of the RC on 25 February 2022.
(2) Ms Wang Guannan was appointed a Director, a member of the NC and a member of the RC on 25 February 2022.

ANNUAL REPORT 2022 25

CORPORATE
GOVERNANCE REPORT
(viii) Each new and existing Director receives appropriate training to develop individual skills in order to discharge his
or her duties as a director of a listed company. A formal letter of appointment would be furnished to every newly-
appointed Director upon his or her appointment explaining, among other matters, the roles, obligations, duties and
responsibilities of a member of the Board. The Group also provides information about its history, mission and values
to the Directors. Where necessary, the Directors will be updated regarding new legislation, regulations and changing
commercial risks which are relevant to the Group. Appropriate briefing and orientation will be arranged for newly
appointed Directors to familiarise them with the Group’s business operations, strategic direction, directors’ duties
and responsibilities and corporate governance practices. They will also be given opportunities to visit the Group’s
operational facilities and meet the Management so as to gain a better understanding of the Group’s business. The
Directors are encouraged to attend seminars and receive training to improve themselves in the discharge of their
duties and responsibilities. These seminars and training are funded by the Company. In addition, the Company has
adopted more robust internal processes designed to ensure compliance with disclosure requirements under the
Mainboard listing rules (“Listing Rules”).

(ix) On the administration of options, the Board has made it a key focal point of their work. The Board includes new grant
applications as an agenda item during Board meetings when there are new option grants. The RC exercises oversight
of the Company’s internal control framework relating to the administration of any share option schemes and makes
recommendations to the Board in respect of possible improvements to such schemes. The Company has initiatives
and measures in place to strengthen its internal processes relating to the grant and exercise of options in accordance
with the Listing Rules, including the appointment of external advisors to review the internal processes if necessary.
These initiatives and measures will be reviewed from time to time and updated as necessary.

(x) The Management monitors changes to regulations, policies and financial reporting standards issued by, amongst
others, the Singapore Exchange Securities Trading Limited (“SGX-ST”) and the Accounting and Corporate Regulatory
Authority of Singapore. Any change that might impact the Group and its disclosure obligations are promptly brought
to the attention of the Board, either during Board meetings or via circulation of Board papers. The external auditors
will update the AC and the Board on the new and revised financial reporting standards that are applicable to the
Company or the Group.

(xi) In addition, the Management regularly updates and familiarises the Directors on the business activities of the Company
prior to Board meetings.

Access to Information

(i) The Board is provided with management reports, and papers containing relevant background or explanatory
information required to support the decision-making process on an on-going basis and in a timely manner.

(ii) Board papers are circulated to the Directors before the scheduled meetings so as to allow for a better understanding
of the issues and to achieve a more effective discussion time for questions that the Directors may have.

(iii) The Directors have separate and independent access to the senior Management and the Company Secretaries. The
Company Secretaries administer, attend and prepare minutes of meetings of the Board and of the Board Committees,
which are thereafter circulated. The Company Secretaries assist the Company to comply with the corporate
secretarial aspects of the Bye-Laws and the applicable sections of the Listing Rules and the applicable sections of
the Companies Act 1967 and the Securities and Futures Act 2001.

(iv) The appointment and removal of the Company Secretaries are subject to the approval of the Board.

(v) In carrying out their duties, the Directors, whether individually or as a group, have direct access to independent
professional advisors to obtain advice, at the Company’s expense.

26 SUNPOWER GROUP LTD.

CORPORATE
GOVERNANCE REPORT
Board Diversity

The Board has put in place a Board Diversity Policy for the Company which endorses the principle that its Board should
have the optimum balance of skills, knowledge, experience and other aspects of diversity to avoid groupthink and foster
constructive debate that support the Group in the pursuit of its strategic and business objectives, and its sustainable
development. The policy provides a range of perspectives, insights and challenges that leads to well-balanced decision-
making for the benefit of the Group.

The Company is committed to establishing and maintaining a diverse Board, comprising Directors of different ages, genders,
qualifications, skills, backgrounds, experience and knowledge in various fields and relevant industries, and other relevant
attributes that will benefit the effective governance of the Group. These differences will be considered in determining the
optimal composition of the Board and, to the extent possible, will be balanced appropriately. All appointments to the Board
are based on merit and after due consideration of the collective skills needed to strengthen the overall board governance
role.

When assessing potential candidates for appointment or re-election to the Board, the NC shall appraise each candidate
based on merit, against the objective criteria set by the Board after considering the benefits of diversity and the needs of
the Board. Details of the Board composition are as follows.

Gender Diversity Directors’ Skills Matrix

Male 7 87.5%
Executive leadership 5
Female 1 12.5%
Financial market expertise 4
Age Group

Risk and compliance 3

35-50 2 25.0%
51-65 3 37.5% Industry knowledge 2
66-80 2 25.0%
Legal expertise 2
81-85 1 12.5%

Diversity Targets and Progress in FY2022

Ensuring diversity to achieve the strategic and business NC reviews annually the balance and mix of skills,
objectives of the Group knowledge, experience, and other aspects of diversity
such as gender and age, and the size of the Board to
facilitate decision making.

Ensuring gender diversity on the Board The Company has appointed one (1) female Director in
FY2022.

Although the Company has not set any specific new targets at this point of time, the NC will consider and recruit talents who
have comprehensive abilities in accordance with the Company’s Board Diversity Policy, in the appropriate circumstances.
The NC will report to the Board on an annual basis on the progress made in achieving the objectives set (if any) for
promoting diversity as described in the policy.

The Board will continue to build on the element of diversity, recognising the importance of having an effective and diverse
Board and will review the Board Diversity Policy periodically to ensure its effectiveness and alignment with the best practice
and the requirements of the Code, as amended from time to time, and any other relevant legislation. Any further progress
made in the ongoing implementation of such policy or objectives will be disclosed in future Corporate Governance Reports,
as appropriate.

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CORPORATE
GOVERNANCE REPORT
Board Composition and Guidance

Principle 2: The Board has an appropriate level of independence and diversity of thought and background in its
composition to enable it to make decisions in the best interests of the Company

(i) The Board comprises the following members:

Due for re-

Date of first Date of last election at the
Position held on appointment re-election next annual Nature of
Name of Director the Board to the Board as Director general meeting appointment

Guo Hong Xin Chairman 12 May 28 April N/A Non-Executive/

2004 2022 Non-Independent

Ma Ming Director/Chief 12 May 24 June Retirement by Executive/ Non-

Executive Officer 2004 2020 rotation pursuant Independent
to Bye-Laws

Lau Ping Sum Pearce Director 2 February 24 June Retirement by Non-Executive/

2005 2020 rotation pursuant Independent
to Bye-Laws

Chin Sek Peng Director 2 February 28 April N/A Non-Executive/

2005 2022 Independent

Li Lei Director 3 March 24 June Retirement by Non-Executive/

2017 2020 rotation pursuant Non-Independent
to Bye-Laws

Yang Zheng Director 10 November 28 April N/A Non-Executive/

2017 2021 Independent

Wang Dao Fu Director 25 June 28 April N/A Non-Executive/

2019 2021 Independent

Wang Guannan Director 25 February 28 April N/A Non-Executive/

2022 2022 Non-Independent

(ii) The Board currently comprises eight (8) Directors, four (4) of whom are Independent Directors. In accordance with
Provision 2.3 of the Code, the Board comprises seven (7) Non-Executive Directors which make up a majority of the
Board.

The NC adopts the provisions of the Listing Rules and of the Code in its review of who can be considered as an
Independent Director. The NC is of the view that all the Non-Executive Directors are Independent except for Mr Guo
Hong Xin (“Mr Guo”), Mr Li Lei and Ms Wang Guannan.

In accordance with Provision 2.2 of the Code, independent directors are to make up a majority of the Board where
the Chairman is not independent. Although Mr Guo is the Non-Executive Chairman of the Board, the Independent
Directors do not currently make up the majority of the Board. Notwithstanding the foregoing, the Board believes
that at this stage, Mr Guo’s leadership in his role as Non-Executive Chairman is still merited as Mr Guo is one of the
founders of the Company, and has been continuing to support the development of the Group.

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GOVERNANCE REPORT
In addition, the Board is capable of maintaining the appropriate level of checks and balances. This is demonstrated
by the fact that Mr Guo would recuse himself from matters where he has a material personal interest. In such cases,
deliberations would be led by the Lead Independent Director. Upon Mr Guo’s recusal, the Independent Directors
would then make up the majority of the Board deciding on such matters. Accordingly, they are in a strong position to
safeguard the interests of the Company, especially when there is a conflict of views and a majority vote is required to
reach a decision. In addition, as each Director actively participates in the Board’s decision-making process, decisions
are made collectively without any individual or small group of individuals influencing or dominating the process.

(iii) Mr Lau Ping Sum Pearce and Mr Chin Sek Peng were first appointed as Directors of the Company on 2 February
2005 and have held their office as Directors for more than nine (9) years. In accordance with Rule 210(5)(d)(iii) of the
Listing Rules, the Company sought and obtained approvals through a two-tier voting process at the Company’s
annual general meeting (“AGM”) in calendar year 2021 for the continued appointments of Mr Lau Ping Sum Pearce
and Mr Chin Sek Peng as Independent Directors of the Company. The approvals will remain valid until the earlier of
Mr Lau Ping Sum Pearce’s and Mr Chin Sek Peng’s retirement or resignation, or the conclusion of the third (3rd) AGM
following the approvals obtained at the AGM in calendar year 2021.

Each Independent Director exercises his or her own judgement independently and in the best interests of the Company
and shareholders. None of the Independent Directors has any relationship with the Company, its subsidiaries, its
related corporations, its substantial shareholders or its officers that could interfere, or reasonably be perceived to
interfere, with the exercise of the Director’s independent business judgement in the best interests of the Company.

The Board has, in concurrence with the NC’s views, determined that Mr Lau Ping Sum Pearce and Mr Chin Sek Peng
should be considered independent notwithstanding that they have served on the Board for more than nine (9) years,
because they both continue to express their viewpoints, debate issues objectively and constructively challenge
the Management’s proposals and decisions on business activities and transactions. Their tenure has therefore not
affected their independence and ability to bring independent and considered judgement to bear in their discharge of
each of their duties as member of the Board and relevant Board Committees.

Notwithstanding the above however, the Board notes that on 11 January 2023, the Listing Rules have been amended
to prescribe a nine-year tenure limit for independent directors. In accordance with Rule 210(5)(d)(iv) of the Listing
Rules, a director will not be independent if he/she has been a director of the company for an aggregate period of
more than nine (9) years (whether before or after listing). Rule 210(5)(d)(iv) will take effect commencing on the date of
the AGM of the Company for the financial year ending on or after 31 December 2023.

(iv) The Board has examined its size and is of the view that it is an appropriate size for effective decision-making, taking
into account the scope and nature of the operations of the Company. The NC is of the view that no individual or small
group of individuals dominate the Board’s decision-making process.

(v) The Board comprises Directors who are all professionals with diverse backgrounds in financial, accounting, legal, and
other industry sectors, thereby enabling them to contribute each of their respective areas of expertise in collectively
leading the Company. The NC is of the view that the current Board consists of the appropriate mix of expertise and
experience to meet the Company’s targets. Qualifications and experiences of the Board members are set out on
pages 14 to 17 of the Annual Report. Particulars of interests of Directors who held office at the end of the financial
year in shares in the Company and in related corporations (other than wholly owned subsidiary companies) are set
out in the Directors’ Statement.

(vi) The Non-Executive Directors contribute to the Board processes by monitoring and reviewing the performance of
the Management against its goals and objectives. Their views and opinions provide alternative perspectives to the
Group’s business, and they bring independent judgement to bear on business activities and transactions involving
conflicts of interest and other complexities.

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(vii) The Non-Executive Directors meet and/or hold discussions as and when required without the Management’s presence
to facilitate a more effective check on the Management. Mr Guo may attend the meeting as Non-Executive Director
when necessary and he would recuse himself from matters where he has a material personal interest, as deliberated
upon in the above principal 2 (ii).

(viii) Based on the Group’s current size and operations, the Board has an appropriate level of independence and diversity
of thought and background in its composition to enable it to make decisions in the best interests of the Company,
consistent with the spirit and intent of Principle 2 of the Code. As at the date of this report, the Board comprises seven
(7) Non-Executive Directors who make up the majority of the Board as well as one (1) Executive Director.

Chairman and Chief Executive Officer

Principle 3: There is a clear division of responsibilities between the leadership of the Board and Management, and no
one individual has unfettered powers of decision-making

(i) Mr Guo is currently the Non-Executive Chairman of the Board while Mr Ma Ming is the Chief Executive Officer
(“CEO”). There is a clear division of roles and responsibilities between the Non-Executive Chairman and the CEO. The
Non-Executive Chairman leads and manages the business of the Board whilst the CEO and his team of management
staff translate the Board’s decisions into executive action. The segregation of the roles and responsibilities of the
Chairman and the CEO ensures an appropriate balance of power, increased accountability and greater capacity of
the Board for independent decision-making.

(ii) The responsibilities of the Chairman include:

• mobilising the Board to formulate the development strategy, set out the development aims and approve the aims;

• leading the Board to ensure the effectiveness of its role in all respects;

• scheduling of meetings to enable the Board to perform its duties responsibly while not interfering with the flow
of the Group’s operations;

• preparing meeting agenda in consultation with other Directors;

• promoting culture of openness and debate at the Board;

• ensuring that the Directors receive complete, adequate and timely information;

• encouraging constructive relations within the Board;

• assisting in ensuring the Group’s compliance with the Code and promoting high standards of corporate
governance;

• overseeing effective communication with shareholders; and

• ensuring that Board meetings are held when necessary.

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The CEO is primarily responsible for overseeing the Management and strategic operation of the Group as well as
assisting in the working of the Board. The responsibilities of the CEO include:

• propelling the implementation of the strategy approved by the Board in order to direct the management team to
effectuate the aims approved by the Board;

• developing the Group’s businesses and operational strategies;

• implementing the Board’s decisions;

• assisting in ensuring the Group’s compliance with the Code and promoting high standards of corporate
governance;

• assisting in the holding of the Board meetings when necessary; and

• reviewing key proposals by the Management before they are presented to the Board.

(iii) The Company Secretaries may be called upon to assist the Chairman in any of the above matters.

(iv) In view of the fact that the Non-Executive Chairman is not an Independent Director, the Company has appointed Mr
Yang Zheng as the Lead Independent Director. Shareholders of the Company with concerns that could have a material
impact on the Group, for which contact through the normal channels with the Non-Executive Chairman, CEO, or Chief
Financial Officer (“CFO”) has failed to resolve or is inappropriate, are able to contact the Lead Independent Director.

(v) The Board believes that there is sufficient oversight and standards of accountability to ensure that there is a clear
division of responsibilities between the leadership of the Board and Management, and no one individual has unfettered
powers of decision-making.

Board Membership

Principle 4: The Board has a formal and transparent process for the appointment and re-appointment of directors,
taking into account the need for progressive renewal of the Board

(i) The NC comprises Mr Lau Ping Sum Pearce, Mr Guo, Mr Chin Sek Peng, Mr Li Lei, Ms Wang Guannan, Mr Yang
Zheng and Mr Wang Dao Fu, a majority of whom are Independent Directors. The chairman of the NC, Mr Wang Dao
Fu, is an Independent Director. The NC meets at least once a year and at other times as required.

(ii) The key terms of reference of the NC are as follows:

(a) the NC shall consist of not less than three (3) Directors, a majority of whom shall be Independent Directors;

(b) the chairman of the NC shall be appointed by the Board and shall be an Independent Director; and

(c) the Board shall appoint a new member of the NC within three (3) months of the date of cessation of a member
so that the number of members does not fall below three (3) if a member, for any reason, ceases to be a
member.

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(iii) The NC performs the following functions in accordance with its terms of reference:

(a) carrying out annual reviews of the effectiveness of the Board and each individual Director;

(b) reviewing and making recommendations to the Board on all candidates nominated for appointment to the
Board, having regard to their background, potential contribution to the Group based on their experience and
expertise, and ability to exercise independent business judgement;

(c) reviewing all candidates nominated for appointment as senior staff of the Management;

(d) reviewing and recommending to the Board, the Board structure, size and composition, taking into account
the balance between Executive and Non-Executive, Independent and Non-Independent Directors and having
regard at all times to the Listing Rules, principles of corporate governance and the Code;

(e) identifying and making recommendations to the Board as to the Directors who are to retire by rotation and to
be put forward for re-election at each AGM of the Company, having regard to the Directors’ contribution and
performance;

(f) assessing the independence of the Directors (taking into account the circumstances set out in the Listing Rules,
the Code and other salient factors); and

(g) proposing a set of objective performance criteria to the Board for approval and implementation, and to evaluate
the effectiveness of the Board, its Board Committees and Directors as a whole and the contribution of each
Director to the effectiveness of the Board, its Board Committees and Directors.

(iv) Pursuant to the Company’s Bye-Laws and the Listing Rules, all Directors are required to submit themselves for re-
nomination and re-election at least once every three (3) years.

(v) The NC is of the view that the effectiveness of each of the Directors is best assessed by a qualitative assessment of
the Director’s contributions, after taking into account his or her other listed company board directorships and other
principal commitments. Therefore, the Board has passed a resolution to remove the maximum number of listed
company board representations that any of its Directors may hold.

(vi) In the event that the Board decides to appoint new Directors, the NC will conduct an assessment to review the
candidate’s qualifications, attributes and past experience followed by interviewing short-listed candidates. The NC
will also consider the proposed candidate’s independence, expertise, background and skill sets before the NC makes
its recommendations to the Board.

(vii) Save for their directorships in the Company, none of the Independent Directors have any relationships with the
Company and/or its related corporations, the Company’s substantial shareholders, or the Company’s officers.

(viii) Succession planning is an important part of the governance process. The NC makes recommendations to the Board
on matters relating to the review of succession plans for Directors and will seek to refresh the Board membership
progressively and in an orderly manner.

With regard to the succession planning for the Board, the NC aims to maintain an optimal Board composition by
considering the Company’s strategic priorities and the factors and trends affecting the long-term success of the
Company, reviewing the skills needed on the Board, and identifying the gaps (which includes considering whether
there is an appropriate level of diversity of thought) on the then existing Board.

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The listed company directorships and principal commitments* of the Directors are set out in the table below:

Name of Directors Listed Company Directorships Principal Commitments*

Executive Directors
Mr Ma Ming Sunpower Group Ltd. Executive Director, CEO
Sunpower Technology (Jiangsu) Co., Ltd Deputy Chairman

Independent Directors
Mr Lau Ping Sum Pearce Sunpower Group Ltd. Independent Director, RC Chairman,
member of AC and NC
Cortina Holdings Limited Independent Director, RC Chairman,
member of AC and NC
H2G Green Ltd. Independent Director, Non-Executive
Chairman of the Board, NC Chairman,
member of AC and RC
– Member of the Singapore Institute of
Directors. Chairman of the Programme
Advisory Committee for BA Translation
and Interpretation
– Examiner for Certification Examination
for Professional Interpreters, School of
Arts and Social Sciences, Singapore
University of Social Sciences
– Adjunct Professor of Translation and
Interpretation

Mr Chin Sek Peng Sunpower Group Ltd. Independent Director, AC Chairman,

NC member, RC member
Cortina Holdings Limited Lead Independent Director, AC
Chairman, NC member

– Director of C&L Business Advisers Pte

Ltd
Executive Chairman responsible for
managing and growing the professional
services of PKF Singapore entities
including PKF-CAP LLP, a firm of
chartered accountants in Singapore.
He is also the Head of risk consulting
and the co-founder of PKF-CAP Risk
Consulting Pte Ltd.

Mr Yang Zheng Sunpower Group Ltd. Lead Independent Director, member of

AC and NC
Luenmei Quantum Co., Ltd. Independent Director
Anhui Xinke New Materials Co., Ltd. Independent Director
Meig Smart Technology Co., Ltd. Independent Director
Svg Group Co., Ltd. Independent Director
– Professor of Nanjing Audit University

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Name of Directors Listed Company Directorships Principal Commitments*

Mr Wang Dao Fu Sunpower Group Ltd. Independent Director, NC Chairman

and RC member
Matex International Limited Independent Director
– Founding Partner of Yuan Tai Law
Offices
– Director of Proceq Trading (Shanghai)
Co. Ltd (China)
– Director of MOBO Information
Technology Pte Ltd

Non-Executive, Non-Independent Directors

Mr Guo Hong Xin Sunpower Group Ltd. Non-Executive Chairman and NC
member
Genscript Biotech Corporation Independent Director, RC Chairman
and AC member
– Chairman of Sunpower Technology
(Jiangsu) Co., Ltd
– Executive Director of Nanjing Fuyou
Investment Co., Ltd.
– Legal Representative of Zhuhai
Hengqin Fuyou Investment Partnership
(Limited Partnership)
Ms Wang Guannan Sunpower Group Ltd. Non-Executive and Non-Independent
Director, member of NC and RC
– Director of DCP Capital

Mr Li Lei Sunpower Group Ltd. Non-Executive and Non-Independent

Director, member of NC and RC
– Managing Director of CDH Investments
Management (Hong Kong) Limited
(“CDH Investments”)
– Mr Li is the managing director of
CDH Investments and according
to the internal arrangement of CDH
Investments, Mr Li is the rotating
director and he has served as director
of another 23 companies in which
CDH Investments has invested.
However, Mr Li is not involved in, nor
does he make any decisions relating
to, any operational matters in these
companies.

* The term “principal commitments” includes all commitments which involve significant time commitment such as full-time occupation, consultancy work,
committee work, non-listed company board representations and directorships and involvement in non-profit organisations. Where a director sits on the boards
of non-active related corporations, those appointments should not normally be considered principal commitments.

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Board Performance

Principle 5: The Board undertakes a formal annual assessment of its effectiveness as a whole, and that of each of its
board committees and individual directors

(i) The Board has established a formal assessment process which will be carried out annually for evaluation of the
performance of the Board as a whole and the contribution by individual Directors to the effectiveness of the Board.
The following are certain of such performance criteria:

• attendance at Board meetings;

• level of participation at Board meetings and overall commitment;

• ability to strategise and propose sound business direction; and

• contribution of specialised knowledge.

(ii) The appraisal process requires the Directors to complete appraisal forms which will be collated by the external
facilitator, Dentons Rodyk & Davidson LLP, which will compile the results of the appraisal for review by the NC. The
NC will thereafter report to the Board. Such an appraisal process was carried out in respect of FY2022.

Dentons Rodyk & Davidson LLP is also the Company’s Singapore corporate secretarial service provider and Senior
Partner, Ms Marian Ho of Dentons Rodyk & Davidson LLP serves as Company Secretary of the Company.

2. REMUNERATION MATTERS

Procedures for Developing Remuneration Policies

Principle 6: The Board has a formal and transparent procedure for developing policies on director and executive
remuneration, and for fixing the remuneration packages of individual directors and key management
personnel. No director is involved in deciding his or her own remuneration.

(i) The RC comprises Mr Lau Ping Sum Pearce, Mr Chin Sek Peng, Mr Li Lei, Ms Wang Guannan and Mr Wang Dao Fu.
A majority of the aforementioned Directors are Independent Directors. The chairman of the RC is Mr Lau Ping Sum
Pearce, an Independent Director. The RC meets at least once a year and at other times as required.

(ii) The key terms of reference of the RC are as follows:

(a) The RC shall consist of not less than three (3) Directors, a majority of whom shall be Independent Directors. At
least one (1) member should be knowledgeable in executive compensation, and if there is a need, expert advice
may be obtained internally or externally.

(b) The chairman of the RC shall be appointed by the Board and shall be an independent Director.

(c) The Board shall appoint a new member of the RC within three (3) months of the date of cessation of a member
so that the number of members does not fall below three (3) if a member, for any reason, ceases to be a
member.

(iii) The duties and responsibilities of the RC include ensuring that there is a formal, transparent and objective procedure
for fixing the remuneration packages of the Directors and key executives. Such level of remuneration should serve
to attract, retain and motivate the Directors and key executives needed to manage the Company successfully. A
proportion of such remuneration should be linked to performance of the Company as well as the individual concerned.

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(iv) The RC performs the following functions in accordance with its terms of reference:

(a) reviewing and recommending to the Board a framework of remuneration for the Board and the key executives of
the Group covering all aspects of remuneration such as Director’s fees, salaries, allowances, bonuses, options
and benefits-in-kind;

(b) proposing to the Board, appropriate and meaningful measures for assessing the Directors’ and key executives’
performance;

(c) reviewing and recommending the specific remuneration package to the Board for each Executive Director and
the key executives;

(d) considering the eligibility of directors, executives and employees for benefits under long-term incentive schemes;

(e) considering and recommending to the Board the disclosure of details of the Company’s remuneration policy; and

(f) exercising oversight of the Company’s internal control framework relating to the administration of any share
option schemes and making recommendations to the Board in respect of any possible improvements to such
schemes.

(v) Each member of the RC shall abstain from voting on any resolution concerning his or her own remuneration.

(vi) The RC shall review the Company’s obligations arising in the event of the termination of the contract of service of
any Executive Director or key management personnel, to ensure that such contracts of service contain fair and
reasonable termination clauses.

(vii) The RC may from time to time, and where necessary or required, seek professional advice internally and/or externally
pertaining to remuneration of all Directors.

Principle 7: The level and structure of remuneration of the Board and key management personnel are appropriate and
proportionate to the sustained performance and value creation of the company, taking into account the
strategic objectives of the company.

(i) None of the Independent Directors have service agreements with the Company. Each Independent Director is paid
a Director’s fee which is determined by the Board based on the effort and time spent as well as responsibilities
as member of the AC, NC and RC. The fees are subject to approval by the shareholders at each AGM. Except as
disclosed, the Independent Directors do not receive any remuneration from the Company.

(ii) According to the service agreement of the Executive Director:

• the service agreement is valid for an initial period of three (3) years which commenced from 1 January 2008 and
shall be renewed automatically annually thereafter. The terms of the service agreement may be amended from
time to time as agreed between the Executive Director and the Company, taking into account the prevailing
developments and circumstances in relation to the employment of the Executive Director with the Company;

• the remuneration of the Executive Director includes a fixed salary and a variable performance related bonus
which is designed to align his or her interests with those of the shareholders; and

• the service agreement may be terminated by either the Company or the relevant Executive Director giving not
less than six (6) months’ notice in writing.

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Directors’ Fees

The proposed fees for Non-Executive Directors to compensate their time and effort comprise a basic retainer fee and
additional fees for appointment to Board Committees and involvement in ad hoc projects. The Board believes that the fees
for Non-Executive Directors are commensurate with their respective levels of contribution, taking into account factors such
as effort, time spent, and responsibilities.

No Director decides on his or her own fees. Directors’ fees are recommended by the RC and are submitted for endorsement
by the Board. Directors’ fees are subject to the approval of shareholders at the AGM.

Currently, Directors’ fees for each financial year are paid in arrears, in the following financial year, after obtaining shareholders’
approval at the AGM.

The remuneration framework and structure are set out in the section on “Principle 8: The Company is transparent on
its remuneration policies, level and mix of remuneration, the procedure for setting remuneration, and the relationships
between remuneration, performance and value creation”.

As reflected in the table set out in the section on “Disclosure on Directors’ and Key Executives’ Remuneration”, 43.0%
of the Executive Director’s remuneration is made up of variable or performance related income/ bonuses. The Board is of
the view that this makes up a significant and appropriate portion of the Executive Directors’ remuneration, and that the
Executive Directors’ performance related remuneration is aligned with the interests of shareholders and other stakeholders
and promotes the long-term success of the Company.

Remuneration of Key Executives

The remuneration framework and structure are set out in the section on “Principle 8: The Company is transparent on
its remuneration policies, level and mix of remuneration, the procedure for setting remuneration, and the relationships
between remuneration, performance and value creation”. The proportion of the key executives’ remuneration linked to
performance is set out in the table in the section on “Disclosure on Directors’ and Key Executives’ Remuneration”. The
Company continually improves and strengthens its internal management to ensure that the remuneration packages are
always appropriate and accompanied by competitive compensation and progressive policies with suitable and attractive
incentives. While the proportion varies between the key executives, the Board is of the view that in each case, performance
related remuneration makes up a significant and appropriate proportion of the key executives’ remuneration, and is aligned
with the interests of shareholders and other stakeholders and promotes the long-term success of the Company.

Principle 8: The Company is transparent on its remuneration policies, level and mix of remuneration, the procedure for
setting remuneration, and the relationships between remuneration, performance and value creation

(i) The Company has a staff remuneration policy which comprises a fixed component and a variable component. The
fixed and variable components are in the form of a base salary and variable bonus that is linked to the performance
of the Company and individual.

(ii) Our remuneration framework is made up of three (3) key components:

• Base/fixed salary

• Variable or performance related income/bonuses

• Other benefits

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Base/fixed salary

Fixed pay comprises a base salary.

Variable or performance related income/bonuses

Variable bonus payouts are based on actual achievement against corporate, business unit and individual performance
objectives.

Other benefits

Social insurance fund comprising housing fund, old-age retirement pension, unemployment compensation, medical
fund and car allowance.

(iii) A breakdown, showing the level and mix of each individual Director’s and key executive’s remuneration in FY2022 is
reflected in the section below on “Disclosure on Directors’ and Key Executives’ Remuneration”.

Disclosure on Directors’ and Key Executives’ Remuneration

The Board has not disclosed the remuneration of the Company’s individual Directors and key executives of the Group
in full, in view of the competitive nature of the industry in which the Group operates and to maintain confidentiality on
remuneration matters of the Group. While the Board acknowledges that not all of the information specified in Provision 8.1
of the Code has been disclosed, the Board believes that for the aforementioned reasons, this decision is in the interests of
the Company. Furthermore, the Board believes that it has been sufficiently transparent (while balancing the interests of the
Company and the Group) in relation to its remuneration policies, level and mix of remuneration, the procedure for setting
remuneration, and the relationships between remuneration, performance and value creation. As such, the Board believes
that the practices that the Board has adopted are consistent with Principle 8 of the Code.

The variable or performance related income/bonus is to recognise the efforts and contributions and performance of
the Executive Directors and key executives, whether as a whole and/or on an individual basis, in particular where such
efforts and contributions and/or performance may not be directly or immediately reflected in or attributable to the financial
performance of the Company and the Group.

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The level and mix of each Director’s and key executive’s remuneration in FY2022 are as follows:

Variable or
performance
related
Remuneration Band & Base/fixed income/ Director’s Other
Name of Director salary bonuses fees benefits* Total

Executive Directors

Between S$2,050,000 to S$2,550,000

Mr Ma Ming 56.2% 43.0% – 0.8% 100%

Non-Executive, Non-Independent Directors

Between S$250,000 to S$500,000

Mr Guo Hong Xin – – 100% – 100%

Independent Directors

Below S$250,000

Mr Lau Ping Sum Pearce – – 100% – 100%

Mr Chin Sek Peng – – 100% – 100%

Mr Yang Zheng – – 100% – 100%

Mr Wang Dao Fu – – 100% – 100%

Non-Executive, Non-Independent Directors

Mr Liu Haifeng David** – – – – –

Mr Li Lei** – – – – –
Ms Wang Guannan** – – – – –

Key Executives

Between S$100,000 to S$350,000

Ms Wang Hui 37.6% 51.2% – 11.2% 100%

Mr Tang Hao 53.6% 42.0% – 4.4% 100%

Mr Shi Shaolin 43.9% 48.2% – 7.9% 100%

Mr Sha Jianhua 55.5% 41.8% – 2.7% 100%

Mr Zheng Xiaodong 53.7% 38.5% – 7.8% 100%

Mr Xu Jun 56.0% 39.2% – 4.8% 100%

* Other benefits include social insurance fund and car allowance.

** Mr Liu Haifeng David, Mr Li Lei and Ms Wang Guannan do not receive remuneration from the Group. Mr Liu Haifeng David had ceased as Director and
Ms Wang Guannan has been appointed as Director of the Company on 25 February 2022 respectively.

Above are the Group’s key executives in FY2022. The total remuneration paid to the above key executives (who are not
Directors or the CEO) of the Company in FY2022 is RMB5.54 million.

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Save as disclosed above, the Company does not have any employees who are substantial shareholders of the Company, or
are immediate family members of a Director, the CEO or a substantial shareholder of the Company, and whose remuneration
exceeded S$100,000 during FY2022.

(iv) The Sunpower Employee Share Option Scheme 2015 (“ESOS 2015”) was approved and adopted by the shareholders
of the Company at a special general meeting held on 29 April 2015(1). The implementation of ESOS 2015 aligned the
interests of its shareholders with the Company.

On 19 May 2015, the Company announced it has granted a total of 59,220,000 share options (the “Initial Grant”).
Of the 59,220,000 share options granted pursuant to the Initial Grant, 5,922,000 share options were granted to Mr
Guo, Executive Director (currently Non-Executive Director) and controlling shareholder of the Company at the time
of the grant; 8,968,000 share options to Mr Ma Ming, Executive Director (currently Executive Director and CEO) and
controlling shareholder of the Company at the time of the grant; and 44,330,000 share options to the employees of
the Group.

An aggregate of 3,710,000 share options from the Initial Grant has lapsed from 2016 to 2020. Subsequently, the
Company has granted a total of 3,710,000 share options, a number that is equivalent to the lapsed options, comprising
210,000, 1,420,000, 1,080,000 and 1,000,000 share options granted respectively on 20 July 2016, 11 May 2018, 31
January 2019 and 20 March 2020, to the employees of the Group. No options were granted or lapsed during the
financial year ended 31 December 2022. As at 31 December 2022, an aggregate of 58,029,000 ordinary shares were
issued and allotted pursuant to the exercise of options under ESOS 2015.

3. ACCOUNTABILITY AND AUDIT

Risk Management and Internal Controls

Principle 9: The Board is responsible for the governance of risk and ensures that Management maintains a sound
system of risk management and internal controls, to safeguard the interests of the Company and its
shareholders

(i) The Group has put in place a system of risk management and internal controls to respond to financial, operational,
compliance and information technology risks that are significant to the achievement of the Group’s business
objectives.

(ii) The Board reviews the adequacy and effectiveness of the Group’s risk management and internal controls, including
operational controls and is responsible for the overall internal control framework annually. The Board acknowledges
that no cost-effective internal control system will preclude all errors and irregularities. A system is designed to
manage rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable and
not absolute assurance against material misstatement or loss.

(iii) The Board has obtained a written confirmation from the CEO and the CFO that:

(a) the financial records of the Group have been properly maintained and the financial statements are prepared
in accordance with Singapore Financial Reporting Standards (International) to give a true and fair view of the
Group’s operations and financial position as at reporting date and its performance for the financial year then
ended; and

(b) the risk management and internal control systems that are in place in the Group are adequate and effective to
address the key risks in the Group.

(1) Further information relating to ESOS 2015 can be found in the circular issued to the Company’s shareholders dated 6 April 2015.

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(iv) Based on the confirmation from the CEO and CFO as described above, review of the findings from the auditors on the
Group’s internal controls and the Management’s responses to the auditors’ recommendation for improvements to the
Group’s internal controls, review of minutes of meetings of the RMC including any significant matters reported to the
AC by the risk management team and discussions with the auditors and Management, the Board with the concurrence
of the AC, is of the opinion that the internal controls are adequate and effective to address key financial, operational,
and compliance risks as at 31 December 2022. Additionally, the Board is satisfied that the risk management system
that it has put in place together with the abovementioned internal controls are adequate and effective to address the
key risks of the Group including information technology risk.

To strengthen its risk management processes and framework, the RMC was formed in 2011. As at the date of this
report, the members of the RMC comprise Mr Ma Ming, Executive Director and Chief Executive Officer; Mr Yang
Zheng, Lead Independent Director; Mr Tang Hao, Group Vice President; Ms Wang Hui, the Chief Financial Officer; and
Ms Li Qingshuang, Group Assistant Vice President and the head of the Internal Control Department. The RMC shall
meet no less than two (2) times a year and at other times as required.

(v) The RMC performs the following key functions in accordance with its terms of reference:

(a) evaluate and provide advice on the business risks (strategic, financial, operational and compliance with laws
and regulations);

(b) study and identify internal controls and risk management strategies to manage the identified risks;

(c) design and implement new controls and strategies to address identified business risks;

(d) study and analyse material investments, financing and other operational management activities, and advise the
Board; and

(e) any other functions as authorised by the Board.

The RMC is currently supported by the head of the Internal Control Department. Ms Zhang Ying, who is a lawyer, is the
risk management secretary of the RMC. Based on the internal controls and risk management framework established,
the team is responsible for supporting the RMC which includes the regular monitoring of risks and updating of the
risk register as appropriate. It also carries out checking of operational and business areas as directed by Management
ensuring that the Company has a comprehensive and sound risk management system that is operating as prescribed.
Findings noted by them will be reported to the Management with any significant matters reported to the AC.

Audit Committee

Principle 10: The Board has an AC which discharges its duties objectively

(i) The AC comprises three (3) Independent Non-Executive Directors, namely, Mr Chin Sek Peng, Mr Lau Ping Sum
Pearce and Mr Yang Zheng.

The Chairman of the AC, Mr Chin Sek Peng is, by profession, a public accountant and a Fellow Chartered Accountant
(practising) of Singapore and a Fellow Member and Business and Finance Professional of the Institute of Chartered
Accountants in England and Wales, and has worked in the accounting profession for almost 43 years. He is currently
the Executive Chairman of PKF Singapore entities including PKF-CAP LLP, a firm of chartered accountants in
Singapore. The other members of the AC have many years of experience in business and financial management. The
Board is of the view that the members of the AC have sufficient financial management expertise and experience to
discharge the function of the AC.

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(ii) The key terms of reference of the AC include the following:

(a) the AC shall consist of not less than three (3) Directors appointed by the Board, all of whom shall be Non-
Executive Directors with the majority being Independent Directors. At least two (2) members of the AC shall
have accounting or related financial management expertise or experience and its membership, details of its
activities, number of meetings and attendance at such meetings, shall be disclosed annually; and

(b) the Board shall appoint a new member within three (3) months of cessation so that the number of members
does not fall below three (3).

(iii) The AC performs, inter alia, the following key functions:

(a) reviewing with internal and external auditors their audit plans, their evaluation of the system of internal controls
and the reports on their findings including recommendations for improvement;

(b) reviewing and reporting to the Board at least annually, the adequacy and effectiveness of the Company’s internal
controls, including financial, operational, compliance and information technology controls which are carried out
internally and/or with the assistance of professional service firms;

(c) reviewing the Group’s financial results and the announcements, and annual financial statements of the Company
and its subsidiaries before submission to the Board for approval;

(d) reviewing the adequacy, effectiveness, scope and results of the external audit and the independence and
objectivity of the external auditors;

(e) reviewing significant findings of internal investigations, if any;

(f) recommending to the Board the appointment or re-appointment of the external auditors and approving the
remuneration and terms of engagement of the external auditors;

(g) reviewing interested person transactions; and

(h) any other functions as required by law or the Code.

(iv) The AC is authorised to investigate any matters in its terms of reference and has full access to the co-operation of
the Management. The AC has full discretion to invite any Director or executive officer to attend its meetings, as well
as access to reasonable resources to enable it to discharge its function properly.

(v) The AC meets with the external auditors and internal auditors without the presence of the Management annually. The
AC also meets with the external auditors to discuss matters relating to internal accounting controls as well as the
results of their audit of the Group.

(vi) The AC reviews, inter alia, the independence and objectivity of the external auditors annually, taking into consideration
the nature and extent of any non-audit services provided to the Company by the external auditors. The AC seeks to
maintain objectivity by reviewing all non-audit services provided by the external auditors to the Group and is satisfied
that the nature and extent of such services would not affect the independence of the external auditors.

(vii) The Group has complied with Rule 712, Rule 715 and Rule 716 of the Listing Rules in relation to its auditors.

(viii) The AC reads technical newsletters as appropriate and receives updates from the auditors during AC meetings, so
as to keep abreast of changes in accounting standards and issues.

(ix) No former partner or director of the Company’s existing auditing firm or audit corporation is a member of the AC.

42 SUNPOWER GROUP LTD.

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Whistle-blowing Policy

The Board undertakes to investigate complaints of suspected fraud in an objective manner and has put in place a whistle-
blowing policy and procedures which provide employees with well-defined and accessible channels (such as email address
and telephone contact) within the Group, including a direct channel to the AC, for reporting suspected fraud, corruption,
dishonest practices or other similar matters.

The Company has a well-defined process which ensures independent investigation of issues/concerns raised including
appropriate follow-up action, and provides assurance that whistle-blowers will be protected from reprisal and detrimental
or unfair treatment for whistle-blowing in good faith. The Company will treat all information received confidentially and
protect the identity of all whistle-blowers. Reports can be lodged by calling the hotline at 0086-025-52798691 or via
email at [email protected]. The AC reviews and considers whistle-blowing complaints at its quarterly meetings to
ensure independent, thorough investigation and appropriate follow-up actions. Should the AC receive reports relating to
serious offences and/or criminal activities in the Group, the AC and the Board can have access to the appropriate external
advice where necessary. The AC is responsible for the overall oversight and monitoring of the whistle-blowing policy and
its implementation.

The AC Commentary to Key Audit Matter

The AC noted the key audit matter (“KAM”) set out in the independent auditor’s report namely the recognition of revenue,
cost and intangible assets during construction phase for GI projects based on percentage completion. As in the previous
financial year, this KAM continued to be considered most significant by the auditor largely because the amount is material
and there is a high level of judgement and estimate involved. It is therefore subject to greater emphasis and scrutiny in the
audit and was selected by the auditor for communication with the AC.

The AC has discussed and reviewed the KAM with the auditor and the management and has provided its comments below.

KAM involving
significant
judgements and
estimates by Conclusion
Management Matter considered by AC by AC

1 Revenue, cost The Group has BOT projects which involve expenditure of costs during AC is satisfied
and intangible the construction phase to be recovered from operating the facilities and that the
assets arising selling steam and electricity in the future. intangible assets
from Build- and revenue
Operate- The Group recognises revenue in accordance with SFRS(I) 15 Revenue recognised for
Transfer from Contracts with Customers, namely revenue is recognised when (or BOT projects
(“BOT”) as) the performance obligations are satisfied. Intangible assets arising during the
projects from costs incurred during the construction phase which are projected to construction
(Refer to Notes be recoverable during the operating period are recognised in accordance phase are in
3.2(a), 17 and 32 with SFRS(I) INT 12 Service Concession Arrangements. accordance with
to the financial the guidance set
statements) The AC discussed with Management and the Auditor on the significant out in SFRS(I)
judgement and estimates made in relation to: INT 12 - Service
Concession
(i) Projection of total revenue which can be billed to end users during Arrangements
the operating period; and SFRS(I) 15
Revenue from
(ii) Evaluation of estimated profit margins for each of the construction Contracts with
and operating phases; Customers.

(iii) Allocation of revenue between the construction and service

elements of the project; and

(iv) Recoverable amount of intangible assets which represent cost

recoverable from future operations.

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Internal Audit

(i) The Company engaged an external professional service firm, CLA Global TS Risk Advisory Pte Ltd (“CLA Global TS”)
(previously known as Nexia TS Risk Advisory Pte Ltd), to perform internal audit review and test of controls of critical
processes, based on the internal audit plan which is approved by the AC before the commencement of work each
year.

(ii) CLA Global TS has unfettered access to all the Group’s documents, records, properties and personnel, and has
unrestricted access to the AC.

(iii) The AC reviewed the scope of internal audit work and the key audit procedures, including any findings from each
review and the Management’s responses thereto; and ensured the adequacy of the internal audit function annually.
Team members of CLA Global TS comprised members of the Institute of Internal Auditors Singapore (“IIA”), a
professional association for internal auditors which has its headquarters in the United States. The internal audit
work carried out by CLA Global TS is guided by the International Standards for the Professional Practice of Internal
Auditing (IIA Standards) which is laid down in the International Professional Practices Framework issued by the IIA.

The internal audit is planned independently in consultation with the AC. The AC oversees the activities and work
performed by the internal auditors and ensures that the internal audit plans are aligned with the Group’s risk
management programme. This is intended to assure that effective and efficient controls are in place to manage the
risks in the Group.

The AC is satisfied that the internal audit function is adequately resourced.

Independent Committee

(i) To strengthen its internal controls that safeguard the interests of the Company and its shareholders, the IC was
formed in 2021 to review and approve the IPTs in accordance with the procedures under the IPT Mandate following
the disposal of the M&S business. The IC shall review all Mandated Transactions at least on a quarterly basis to
ensure that they are carried out on normal commercial terms and in accordance with the procedures outlined in its
terms of reference.

(ii) The IC consists of the members of the AC and Mr Wang Dao Fu, an Independent Non-Executive Director.

(iii) The key terms of reference of the IC include the following:

(a) The IC shall consist of the members of the AC and such other member as may be appointed from the Board
from time to time, all of whom shall be Non-Executive Directors with the majority being Independent Non-
Executive Directors. At least two (2) members of the IC shall have accounting or related financial management
expertise or experience.

(b) The Board shall appoint a new member within three (3) months of cessation so that the number of members
does not fall below four (4).

(iv) The IC performs, inter alia, the following key functions in accordance with its terms of reference and in compliance
with the procedures under the IPT Mandate* and the Listing Rules:

(a) review and approve Mandated Transactions in relation to the entry into engineering, procurement and
construction (“EPC”) contracts that relate to the provision of products and EPC services in order to construct
the infrastructure of the Green Investment (“GI”) facilities with the Mandated Interested Persons, following the
review and approval of the Group Chief Financial Officer (“Group CFO”) and the General Manager (“GM”) of
Jiangsu Sunpower Clean Energy Co., Ltd. (江苏中圣清洁能源有限公司);

* Note: The full procedures under the IPT Mandate can be referred to in the section of Interested Person Transactions

44 SUNPOWER GROUP LTD.

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(b) review and approve Mandated Transactions in relation to the entry into Utility Facility EPC Contracts with a
value equal to or exceeding RMB10 million, following the review and approval of the Group CFO and the GM
or the Deputy GM of Jiangsu Sunpower Clean Energy Co., Ltd. (江苏中圣清洁能源有限公司). The Utility Facility
EPC Contracts relate to the provision of products such as pipeline or other smaller-scale equipment and the
provision of EPC services relating to the installation, reforming and/or upgrading of such pipelines or other
equipment for the GI facilities and each Utility Facility EPC Contract is subject to the Framework Agreement;

(c) review and approve Mandated Transactions in relation to the lease of office buildings and/or facilities from the
Mandated Interested Persons following the review and approval of the Group CFO and the Group Head of
Internal Control;

(d) review and approve other Mandated Transactions according to the IPT Mandate approved by non-interested
shareholders;

(e) observe or oversee the administration of procedures of Mandated Transactions according to the IPT Mandate
approved by non-interested shareholders; and

(f) review from time to time such guidelines and procedures to determine if they are adequate and/or commercially
practicable in ensuring that transactions between the Group and the Mandated Interested Persons are
conducted at arm’s length and on normal commercial terms.

Interested Person Transactions

(Rule 907 of the Listing Rules)

The Group has established procedures to ensure that all transactions with interested persons are reported on a timely
manner to the AC or the IC (as the case may be, depending on whether the interested person transactions fall within the
ambit of the IPT Mandate (as defined below)) and that the transactions are carried out on normal commercial terms and will
not be prejudicial to the interests of the Company and its non-controlling shareholders.

As Mr Guo and Mr Ma Ming are both interested persons, any transaction by the Company or any of its subsidiaries with
Mr Guo and Mr Ma Ming or any of their respective associates (“Mandated Interested Persons”) will be regarded as an
interested person transaction (“IPT”) under Chapter 9 of the Listing Rules following the Disposal of the M&S business
completed on 30 April 2021.

To ensure that Mandated Transactions with Mandated Interested Persons are undertaken at (a) arm’s length and on normal
commercial terms consistent with the Group’s usual business practices and on terms which are not more favourable than
those extended to unrelated third parties; or (b) in any event, on terms no less favourable to the Group than prevailing open
market rates, and will not be prejudicial to the interests of the Group and its minority shareholders, the Group adopted
the following procedures for the review and approval of Mandated Transactions under the Shareholders’ Mandate for
Interested Person Transactions (the “IPT General Mandate”) as approved by shareholders on 27 May 2022.

(a) The following procedures have been adopted in relation to the entry into EPC Contracts with Mandated Interested
Persons:

(i) The entry into such EPC Contracts will be determined via a tender, with quotations from at least three (3)
bidders, of which at least two (2) are unrelated third parties. The Group will only enter into contracts with the
Mandated Interested Persons if the Group CFO and the GM of Jiangsu Sunpower Clean Energy Co., Ltd.
(江苏中圣清洁能源有限公司) (who must each have no interest, direct or indirect, in the transaction) are satisfied
that their rates or prices are not higher than the most competitive third party quotes for similar products or
comparable services, taking into account all relevant factors.

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(ii) If competing quotes from unrelated third party bidders cannot be obtained, the Group will obtain two (2) recent
contracts (if possible or available) between the Mandated Interested Persons and their unrelated third party
customers for the same or substantially similar products and/or services, prior to the entry into contracts or
transactions with the Mandated Interested Persons, to compare whether the prices and terms are fair and
reasonable, and comparable to those offered to the unrelated third party customers. The Group CFO and the
GM of Jiangsu Sunpower Clean Energy Co., Ltd. (江苏中圣清洁能源有限 公司) (who must each have no interest,
direct or indirect, in the transaction) will determine whether the prices and terms are fair and reasonable and
in accordance with the usual business practices and pricing policies or industry norms, taking into account all
relevant factors.

(iii) Upon satisfactory review by the Group CFO and the GM of Jiangsu Sunpower Clean Energy Co., Ltd. (江苏中
圣清洁 能源有限公司 ), the entry into EPC Contracts will be subject to prior approval by a simple majority of the
IC, who must each not have any interest, direct or indirect, in the transaction.

(b) The following procedures have been adopted in relation to the provision of Utility Facilities EPC Contracts which are
generally contracts of a relatively smaller transaction value by Mandated Interested Persons:

(i) Each Utility Facilities EPC Contracts will be subject to a Framework Agreement which, regardless of value, shall
be jointly reviewed by the Group CFO and the GM of Jiangsu Sunpower Clean Energy Co., Ltd. (江苏中圣清洁能
源有限 公司) (who must each not have any interest, direct or indirect, in the transaction). Upon satisfactory review
by the relevant persons in accordance with the procedures above, the entry into such Framework Agreement
will be subject to prior approval by a simple majority of the IC, who must each not have any interest, direct or
indirect, in the transaction. Each Framework Agreement shall specify (1) prescribed standards for construction
works and their review and acceptance; (2) construction cost basis of computation, including pricing of raw
materials and construction works; and (3) pricing mechanism, which shall be within the range indicated in the
benchmark analysis report.

(ii) A benchmark analysis report will be issued by an independent professional firm (which will be a reputable firm
with necessary experience, track record and professional certifications and qualifications to undertake the
benchmark analysis report, as determined by the IC) and attached as part of the review and approval of the
Utility Facilities EPC Contracts. This report will be updated annually and will state the gross margin guidance for
such IPTs, taking into account all relevant factors.

The Group will only enter into such Utility Facilities EPC Contracts with Mandated Interested Persons if the
relevant persons reviewing the transaction as set out in Paragraphs (b)(iii) and (b)(iv) below (who must each have
no interest, direct or indirect in the transaction) have reviewed and are satisfied that their price and rate is not
higher than the gross margin guidance stated in the benchmark analysis report.

(iii) Each Utility Facilities EPC Contract below RMB10 million in value shall be reviewed by the Deputy GM of
Jiangsu Sunpower Clean Energy Co., Ltd. (江苏 中圣清洁能源有限公司), who must not have any interest, direct
or indirect, in the transaction. Upon satisfactory review by the Deputy GM, the entry into such contracts will be
subject to prior approval by the Group CFO and the GM of Jiangsu Sunpower Clean Energy Co., Ltd. (江苏中圣
清洁能源有限公司), who must each not have any interest, direct or indirect, in the transaction.

(iv) Each Utility Facilities EPC Contract equal to or exceeding RMB10 million in value shall be jointly reviewed by
(1) the Group CFO and (2) the GM or the Deputy GM of Jiangsu Sunpower Clean Energy Co., Ltd. (江苏中圣清
洁能源有限 公司), who must each not have any interest, direct or indirect, in the transaction. Upon satisfactory
review, the entry into such Mandated Transactions will be approved by a simple majority of the IC, who must
each not have any interest, direct or indirect, in the transaction.

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(c) The following procedures will be adopted in relation to the lease of office buildings and/or facilities from Mandated
Interested Persons:

(i) The rent payable to the Mandated Interested Persons shall be at an annual rent no higher than the prevailing
market rent as supported by an independent report issued by an independent firm with the relevant track
record or experience, no more than two (2) months prior to the lease and/or the renewal of the lease, with the
report cost borne by the Group. The Company may engage independent firms such as GW Financial Advisory
Services Ltd. (盛德财务咨询服务有限公司), a Hong Kong-based specialist transaction and valuation advisory
firm, or other suitably qualified independent professional firm, for the purposes of the foregoing. The IC will
review and approve such appointment to ensure that the independent firm engaged will be an accredited valuer
under prevailing laws and regulations in the PRC, if any.

(ii) Each lease shall be jointly reviewed by (1) the Group CFO and (2) the Group Head of Internal Control, who must
each not have any interest, direct or indirect, in the transaction. Upon satisfactory review, the entry into such
Mandated Transactions will be subject to prior approval by a simple majority of the IC, who must each not have
any interest, direct or indirect, in the transaction.

(iii) The Group will only enter into the leases if the relevant persons reviewing the transaction as set out in Paragraph
(c)(ii) above (who must each have no interest, direct or indirect in the transaction) are satisfied that the rent
payable is in line with or better than prevailing market rental rates for comparable properties, taking into account
factors such as the geographical location, facilities and other relevant factors that may affect rental rates or
terms of the lease.

(d) In the event that a member of the IC has an interest in a Mandated Transaction, or is a nominee of the Mandated
Interested Person, or if he also serves as an independent non-executive director on the board or an audit or other
board committee of the Mandated Interested Person, and he participates in the review and approval process of the IC
in relation to a transaction with that Mandated Interested Person, or if any associate (as defined in the Listing Rules)
of a member of the IC is involved in the decision-making process on the part of the Mandated Interested Person, he
shall abstain from participating in the review and approval process of the IC in relation to that transaction.

(e) If the Group CFO, the GM and/or the Deputy GM of Jiangsu Sunpower Clean Energy Co., Ltd. (江苏中圣清洁能源
有 限公司 ) and/or the Group Head of Internal Control has an interest in a Mandated Transaction, or is a nominee of
the Mandated Interested Person, such person shall abstain from reviewing and approving that transaction and the
Company shall, subject to the approval of the IC, recommend another Group officer of an equivalent rank (who must
not have any interest, direct or indirect, in the transaction) to review and/or approve the Mandated Transaction.

Any transaction under the IPT General Mandate shall only be approved if the transactions are at arm’s length and on
normal commercial terms, in accordance with the guidelines and review procedures in this section, and the basis of the
transactions are documented in the IPT Register (as defined below), with supporting documents.

In addition to the guidelines and review procedures above, the Group has implemented the following additional guidelines
and review procedures to ensure that the Mandated Transactions under the IPT General Mandate are at arm’s length basis
and on normal commercial terms:

(a) A register is being maintained to record the list of interested persons and their associates (to be updated immediately
on any changes). The list shall be reviewed every quarter by the Group CFO and subject to verifications or declarations
as required by the IC. This list shall be disseminated to any Group staff that the Group’s finance team considers
relevant for the purposes of entering into transactions under the IPT General Mandate.

(b) A register is being maintained to record all IPTs (including the Mandated Transactions) with interested persons (including
the Mandated Interested Persons) (including the bases on which the IPTs are entered into, amount and nature) (the “IPT
Register”) by the Group’s finance team, which shall be reviewed by the Group CFO every month.

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(c) The IC shall review all Mandated Transactions at least every quarter to ensure they are on normal commercial
terms and in accordance with the procedures above. Such reviews include the examination of the transaction and
supporting documents or such data deemed necessary by the IC. All relevant non-quantitative factors will also be
taken into account. The IC shall, when it deems fit, request for additional information from independent sources,
advisers or valuers, and/or require the appointment of an independent professional firm to provide additional review
of the internal control procedures and review procedures and their implementation pertaining to IPTs (including the
Mandated Transactions) under review and to report to the IC every quarter.

(d) The IC shall also review, from time to time, guidelines and procedures for adequacy and/or commercial practicability
to ensure that IPTs are at arm’s length and on normal commercial terms. If the IC views the procedures as no longer
appropriate or insufficient or if there are changes to the nature of, or manner in which, the business activities of the
Group or the Mandated Interested Persons are conducted, it will take actions deemed proper in respect of such
procedures and guidelines and/or modify or implement them to ensure the Mandated Transactions are conducted on
normal commercial terms and will not be prejudicial to the interests of the Company and its minority shareholders,
and the Company will seek a fresh general mandate based on new internal control procedures and review procedures
so that Mandated Transactions will be carried out at arm’s length, on normal commercial terms and will not be
prejudicial to the interests of the Company and its minority shareholders. If there is no fresh mandate, any IPT will be
entered into in accordance with the requirements under Chapter 9 of the Listing Rules (including Rule 905 and Rule
906). In addition, the IC will review every Mandated Transaction pending the fresh mandate to provide an additional
safeguards. For the avoidance of doubt, the proposed revision to the review procedures as set out under Paragraph
(b)(i) is being proposed to enhance and strengthen the review procedures and not as a result of any review from the
IC that the current procedures have become inappropriate of insufficient.

(e) The Board will ensure that all disclosure, approval and other requirements on IPTs, including those required by
prevailing legislation, the Listing Rules (in particular, Chapter 9 thereof) and relevant accounting standards, are
complied with. The Company will endeavour to comply with the recommendations of the Code.

(f) The Group will incorporate a review of IPTs in its annual internal audit plan. The internal auditors will review the IPTs
annually to ensure that, amongst other things, relevant approvals have been obtained and the guidelines and review
procedures have been adhered to. They will report their findings to the IC.

All other IPTs not subject to the IPT Mandate will be reviewed and approved in accordance with the threshold limits in
Chapter 9 of the Listing Rules, to ensure normal commercial terms and are not prejudicial to the interests of the Company
and its minority shareholders. If such IPTs require the Board and the AC’s approval, the relevant information will be
submitted to them for review. If such transactions require shareholder approval, additional information may be required to
be presented and an independent financial adviser may be appointed for an opinion.

The AC will review all IPTs quarterly to ensure that the prevailing SGX-ST rules and regulations (in particular, Chapter 9 of
the Listing Rules) are complied with.

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The aggregate value of transactions entered into by the Group with interested persons under the IPT Mandate as defined
in the SGX-ST Listing Rules for FY2022 are as follow:

Aggregate value of
all IPTs for the period Aggregate value of all
from 1 January 2022 IPTs conducted under
to 31 December 2022 shareholders’ mandate
(excluding transactions pursuant to Rule 920
less than $100,000 and for the period from
transactions conducted 1 January 2022 to
under shareholders’ 31 December 2022
mandate pursuant to (excluding transactions
Rule 920) less than $100,000)

Name of interested person Nature of relationship RMB’000 RMB’000

Jiangsu Sunpower Technology Co., Ltd.

• Lease of office buildings Associate of controlling – 2,147
shareholders

• Construction work for Industrial Associate of controlling – 889

Steam Pipeline Project shareholders

Jiangsu Sunpower Pipe-Line Engineering Technology Co., Ltd.

• Equipment cost for utility Associate of controlling – 1,458

facilities for EPC shareholders

• Construction work for PC Associate of controlling – 13,466

Contract Industrial Steam shareholders
Pipeline Project

• Construction work for Pipeline Associate of controlling – 2,777

and Condensation Recovery shareholders
Project

Jiangsu Sunpower Pressure Vessels Equipment Manufacturing Co., Ltd. (Jiangning branch), Sunpower Technology
(Jiangsu) Co., Ltd., Jiangsu Sunpower Pipe-Line Engineering Technology Co., Ltd., Jiangsu Sunpower Technology Co.,
Ltd., and Nanjing Shengnuo Heat Pipe Co.,Ltd.

• Fee received for providing Associate of controlling 5,066 –

catering services in staff canteen shareholders

The Company is seeking a renewal of the Shareholders’ Mandate for Interested Person Transactions at a special general
meeting (SGM) to be held on the same day as the forthcoming AGM.

The Board is of the view that the transactions above were not prejudicial to the interest of the Group or the Company’s
minority shareholders.

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4. SHAREHOLDER RIGHTS AND ENGAGEMENT

Principle 11: The Company treats all shareholders fairly and equitably in order to enable them to exercise shareholders’
rights and have the opportunity to communicate their views on matters affecting the Company. The
Company gives shareholders a balanced and understandable assessment of its performance, position and
prospects

(i) The Board provides the shareholders with a detailed and balanced explanation and analysis of the Company’s
and Group’s performance, position and prospects on a quarterly basis. Financial reports and other price sensitive
information are disseminated to shareholders through announcements via SGXNet, press releases and the Company’s
website. The Management presents the quarterly financial results announcement to the AC for review and after the
review, the AC recommends the financial results announcement to the Board for approval before being released. If
required, the Group’s external auditors’ views will be sought. The Board ensures that all relevant regulatory compliance
requirements and updates will be highlighted from time to time to ensure adequate compliance with the regulatory
requirements. The Board will also review and approve any press releases concerning the Company’s financial results.
The Company’s Annual Report is available on request and accessible on the Company’s website.

(ii) The Board reviews operational and regulatory compliance reports from the Management to ensure compliance with
all of the Group’s operational practices and procedures and relevant regulatory requirements.

(iii) In line with the Listing Rules, the Board provides an assurance statement to the shareholders in respect of the interim
financial statements. The Management maintains regular contact and communication with the Board through various
means, including the preparation and circulation to all Board members of quarterly and full year financial statements
of the Group. This allows the Board to monitor the Group’s performance and position as well as the Management’s
achievements of the goals and objectives determined and set by the Board.

(iv) At AGMs, shareholders are given the opportunity to air their views and ask Directors or Management questions
regarding the Company. Shareholders are encouraged to attend the AGMs to ensure a high level of accountability and
to stay informed of the Group’s strategies and goals. The AGM is the principal forum for dialogue with shareholders.
The Board supports the Code’s principle to encourage shareholder participation. The Bye-Laws allow a shareholder
of the Company to appoint one (1) or two (2) proxies to attend the AGM and vote in place of the shareholder. Voting in
absentia and by electronic mail may only be possible following careful study to ensure that integrity of the information
and authentication of the identity of shareholders via the internet is not compromised.

(v) The members of the AC, NC and RC will be present at the AGM to address queries relating to the work of these
committees. The Company’s auditors are also invited to attend the AGM.

(vi) All resolutions tabled at the general meetings are voted by poll for which the procedures are clearly explained. The
voting results of each resolutions tabled are announced at the meeting and in an announcement released after the
meeting to the SGX-ST via SGXNet.

(vii) The resolutions at general meetings are on each substantially separate issue. All the resolutions at the general
meetings are in single item resolutions.

(viii) The Company Secretaries prepare minutes of general meetings that include comments or queries from shareholders
relating to the agenda of the meetings, and responses from the Board and the Management, and are made available
to shareholders upon their request.

(ix) The Company has not implemented electronic voting with a voting device at general meetings following a cost/
benefit review but will consider implementing it in future if electronic voting benefits outweigh the costs.

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(x) The attendance of each Director at general meetings held in FY2022 is set out as follows:

Special Special
AGM General Meeting General Meeting
(28 April 2022) (28 April 2022) ( 27 May 2022)

Attended Attended Attended

Guo Hong Xin ✓ ✓ ✓
Ma Ming ✓ ✓ ✓
Lau Ping Sum Pearce ✓ ✓ ✓
Chin Sek Peng ✓ ✓ ✓
Li Lei ✓ ✓ ✓
Wang Guannan ✓ ✓ ✓
Yang Zheng ✓ ✓ ✓
Wang Dao Fu ✓ ✓ ✓

(xi) The Company treats shareholders fairly and equitably in order to enable them to exercise shareholders’ rights and have
the opportunity to communicate their views on matters affecting the Company. The Company releases resolutions
passed at shareholders’ meetings through SGXNet together with the breakdown of all valid votes cast at the meeting
as soon as practicable. The Company shall disclose or publish the minutes of general meetings of shareholders on
its corporate website.

(xii) The Group does not have a fixed dividend policy at present. However, the Company has distributed dividends every
year since FY2010.

Principle 12: The Company communicates regularly with its shareholders and facilitates the participation of shareholders
during general meetings and other dialogues to allow shareholders to communicate their views on various
matters affecting the Company

(i) The Board is mindful of the obligation to keep shareholders informed of all major developments that affect the Group
in accordance with the Listing Rules.

(ii) Information is communicated to shareholders on a timely basis through:

• annual reports that are prepared and issued to all shareholders within the mandatory period;

• public announcements via SGXNet system, the press and research analysts;

• notices of annual general meetings; and

• the Company’s corporate website http://www.sunpowergroup.com.cn and investor relations website

http://sunpower.listedcompany.com which shareholders can use to access information on the Group.

(iii) The Board will support and encourage active shareholders’ participation at AGMs as it believes that general meetings
serve as an opportune forum for shareholders to meet the Board and key management, and to interact with them.

(iv) General meetings have been and are still the principal forum for dialogue with the shareholders. They offer opportunities
for the Board to interact with shareholders, understand their views, gather feedback as well as address concerns.
Enquiries by shareholders are dealt with as promptly as practicably possible.

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(v) The Company is committed to upholding high standards of corporate transparency and disclosure, whilst safeguarding
its commercial interests.

(vi) The Group does not practise selective disclosure. The Company makes every effort to ensure that shareholders
have easy access to clear, meaningful and timely information on the Company in order to make informed investment
decisions. All material information and presentation slides (if any) would be released via SGXNet on a timely basis.

5. MANAGING STAKEHOLDER RELATIONSHIPS

Principle 13: The Board adopts an inclusive approach by considering and balancing the needs and interests of material
stakeholders, as part of its overall responsibility to ensure that the best interests of the Company are served

(i) The Company has arrangements in place to identify and engage with its material stakeholder groups and to manage
its relationships with such groups and discloses its strategy and key areas of focus in relation to the management of
stakeholder relationships during the reporting period in its Sustainability Report that is released separately from its
Annual Report.

(ii) The Company has its own corporate website and updates it on a timely basis to communicate and engage with
stakeholders. In addition, the Company has established diverse communication channels to proactively communicate
and engage with its stakeholders as introduced in the Company’s Sustainability Report. For further details, please
refer to the Company’s Sustainability Report.

6. DEALINGS IN SECURITIES
(Rule 1207(19) of the Listing Rules)

Directors and officers of the Group are advised not to deal in the Company’s shares on short-term considerations or when
they are in possession of unpublished price-sensitive information. They are not allowed to deal in the Company’s shares
during the period commencing two (2) weeks before the announcement of the Company’s financial statements for each
of the first three (3) quarters of the financial year and one (1) month before the announcement of the Company’s full year
financial statements, and ending on the date of the announcement of the relevant results.

The Company has complied with the SGX-ST’s rules on best practices on dealings in the Company’s securities in FY2022.

7. MATERIAL CONTRACTS
(Rule 1207(8) of the Listing Rules)

Save for the service agreements between the Executive Director and the Company, there are no material contracts of
the Company or its subsidiaries involving the interest of any Director or controlling shareholders subsisting at the end of
FY2022.

52 SUNPOWER GROUP LTD.

CORPORATE
GOVERNANCE REPORT
8. USE OF PROCEEDS FROM CONVERTIBLE BONDS

On 3 March 2017, the Company completed the issuance of first tranche convertible bonds of an aggregate principal
amount of US$110 million (“Tranche 1 Convertible Bonds” or “CB1s”), which are convertible into fully paid ordinary
shares in the capital of the Company to Glory Sky Vision Limited (“Glory Sky”), ultimately indirectly and beneficially owned
by CDH Fund V, L.P. (“CDH”).

On 10 January 2018, Glory Sky transferred US$60 million in principal amount of CB1s to three (3) distinct entities of DCP
Capital Partners L.P. (“DCP”). As a result of the transfer, Glory Sky now holds US$50 million of CB1, while Blue Starry
Energy Limited (“Blue Starry”), Green Hawaii Air Limited and Alpha Keen Limited (each a wholly-owned subsidiary of DCP)
each holds US$46,000,815, US$2,999,185 and US$11,000,000 of CB1 respectively, or US$60 million collectively.

On 6 September 2018, the Company obtained shareholders’ approval for the issuance of a second tranche of convertible
bonds of an aggregate principal amount of US$70 million (“Tranche 2 Convertible Bonds” or “CB2”) and warrants
exercisable at an aggregate amount of US$30 million (the “Warrants” or the “Warrant Shares”) to DCP and CDH (each an
“Investor” and collectively, the “Investors”) to fund the GI related business of the Company. Subsequently, the Company
completed the issuance of CB2 with an aggregate principal amount of US$20 million on 15 October 2018 and completed
the issuance of 57,625,714 Warrants on 21 December 2018. As at 31 December 2020, all the Warrants expired unexercised,
and all 57,625,714 Warrants have lapsed and ceased to be valid for any purpose.

On 31 December 2020, the Company and the Investors entered into an amendment agreement (the “Amendment
Agreement”), in connection with the disposal of the M&S business, to amend certain terms of the purchase agreements of
the CB1s and CB2s. The Amendment Agreement confirms that the aggregate principal amount of the Tranche 1 Convertible
Bonds and Tranche 2 Convertible Bonds issued as at the date of the Amendment Agreement is US$130 million, and
proposes to extend the maturity date of the CBs by one (1) year to 3 March 2023.

The net proceeds raised from CB1 is approximately US$106.2 million after deducting transaction expenses of US$3.8
million, while expected net proceeds from the issuance of CB2 will be approximately US$67.6 million following the full
issuance of CB2 to the investors, after deducting transaction expenses of approximately US$2.4 million.

The net proceeds have been and will be utilised for the expansion and further investment into GI business, including by way
of BOT/BOO/TOT models of centralised steam and electricity projects and other environmental protection related projects.

ANNUAL REPORT 2022 53

CORPORATE
GOVERNANCE REPORT
As of 31 January 2023, the Company has utilised an aggregate of US$123.8 million of the net proceeds from CBs as per
the schedule below.

Project Use of Convertible Bonds Proceeds Amount

Shantou Project construction and equipment US$ 20.4 million

procurement (approximately RMB132.6 million)
Liutuan Registered capital US$ 0.8 million
(approximately RMB5.2 million)
Jining JVC Installation of steam distribution US$ 1.6 million
pipeline (approximately RMB10.3 million)
Xinjiang Registered capital US$ 1.4 million
(approximately RMB9.0 million)
Yingtan(1) Registered capital US$ 0.1 million
(approximately RMB0.5 million)
Shandong Yangguang Institute Purchase consideration of the US$ 4.3 million
acquisition (approximately RMB28.0 million)
Xinyuan Thermal Power Purchase consideration of the US$ 13.1 million
acquisition (approximately RMB85.0 million)
Xintai Zhengda Thermoelectric Purchase consideration of the US$ 22.0 million
acquisition and construction of new (approximately RMB145.0 million)
facilities
Yongxing Thermal Power Purchase consideration of the US$ 50.2 million
acquisition (approximately RMB325.5 million)
General Administrative and general expenses US$ 9.9 million
for business expansion of Green (approximately RMB64.6 million) (2)
Investment related business
Total Convertible Bonds Proceeds utilised US$ 123.8 million
(approximately RMB805.7 million)

* Note:

(1) Yingtan Sunpower Clean Energy Co., Ltd. was cancelled after the comprehensive evaluation of the Company.

(2) It consists of (a) RMB42.7 million of remuneration for the development and management teams of GI; (b) RMB20.3 million of pre-development
expenses of GI projects, such as costs expended for pre-investment due diligence activities, including project inspection, valuation and audit fees,
communication costs and travel expenses etc; (c) RMB1.5 million of purchase of fixed assets for development teams of GI business; (d) RMB0.1 million
of stamp duties for applicable GI transactions.

(3) The exchange rate is based on the actual settlement conditions.

Each of the above utilisation of the proceeds from the Convertible Bonds is consistent with the intended use as disclosed
in the Company’s circular to shareholders dated 13 February 2017 and 21 August 2018.

54 SUNPOWER GROUP LTD.

CORPORATE
GOVERNANCE REPORT
9. USE OF PROCEEDS FROM M&S DISPOSAL

The Company announced the proposed disposal of the M&S business on 31 December 2020. On 16 April 2021, the
proposed disposal was approved by shareholders of the Company at a Special General Meeting.

On 21 May 2021 and 2 July 2021, the Company announced that it has received the Tranche 1 and Tranche 2 Consideration of
RMB 1,603.0 million and RMB 687.0 million respectively, for an aggregate amount of RMB 2,290.0 million. After accounting
for the expenses incurred by the Company in connection with the disposal, including capital gains tax and stamp duties, of
RMB 208.9 million and project adviser fees of RMB 56.7 million, the net proceeds from the proposed disposal of the M&S
were RMB 2,024.4 million.

Unless otherwise defined, all capitalised terms and references used herein shall bear the same meaning ascribed to them
in the circular to shareholders dated 3 May 2021.

As of 31 January 2023 Use of Proceeds (RMB’000)

Proposed Special Dividend (925,144)(1)

Bondholder’s Special Dividend (403,316)(1)(2)
Capital expenditure on existing projects (492,521)
Feedstock procurement for operation (79,943)
Construction costs due (114,585)
Subtotal of net disposal proceeds used (2,015,509)
Use of Proceeds balance 8,945

Note:

(1) On 18 June 2021 and 21 July 2021, a Special Dividends of RMB 925.1 million and RMB 403.3 million was paid to the shareholders and bondholders
of the Company respectively.

(2) Based on the actual exchange rate utilised by the Company to exchange RMB into USD.

10. USE OF PROCEEDS FROM PLACEMENT OF TREASURY SHARES

Unless otherwise defined, all capitalised terms and references used herein shall bear the same meaning ascribed to them
in the Company’s circular to its shareholders dated 3 May 2021 (the “Circular”).

On 19 May 2021, the shareholders in a Special General Meeting approved the proposed placement of 2,542,000 treasury
shares (the “Placement Shares”) to the Placees at a price of S$0.368 for each Placement Share, on and subject to the
terms of the Placement Letters (the “Proposed Placement”), as stated in the Circular.

On 1 June 2021, the Company allotted and issued a total of 2,542,000 treasury shares, being the aggregate number of
Placement Shares, to the Placees in the proportion set out in Paragraph 2.4 of the Circular.

The gross proceeds arising from the Proposed Placement are S$935,456.00, while the amount of actual net proceeds from
the Proposed Placement are S$845,096.37 (the “Net Proceeds”), after deducting expenses of S$90,359.63 comprising (a)
legal and regulatory fees and (b) miscellaneous expenses.

As at 31 December 2022, the Net Proceeds have been fully used for procurement of raw materials required for operation
of GI plants.

ANNUAL REPORT 2022 55

CONTENTS

057 Directors’ Statement

061 Independent Auditor’s Report

065 Statements of Financial Position

Consolidated Statement of Profit or

067
Loss and Other Comprehensive Income

069 Statement of Changes in Equity

072 Consolidated Statement of Cash Flows

075 Notes to the Financial Statements

56 SUNPOWER GROUP LTD.

DIRECTORS’
STATEMENT
The directors present their statement together with the audited consolidated financial statements of Sunpower Group Ltd. (the
“Company”) and its subsidiaries (the “Group”) and statement of financial position and statement of changes in equity of the
Company for the financial year ended December 31, 2022.

In the opinion of the directors, the consolidated financial statements of the Group and the statement of financial position and
statement of changes in equity of the Company as set out on pages 65 to 171 are drawn up so as to give a true and fair view
of the financial position of the Group and of the Company as at December 31, 2022, and the financial performance, changes in
equity and cash flows of the Group and changes in equity of the Company for the financial year then ended and at the date of
this statement, there are reasonable grounds to believe that the Company will be able to pay its debts when they fall due.

1 DIRECTORS

The directors of the Company in office at the date of this statement are:

Guo Hong Xin

Ma Ming
Lau Ping Sum Pearce
Chin Sek Peng
Li Lei
Yang Zheng
Wang Dao Fu
Wang Guannan

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF

THE ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose
objet is to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures in
the Company or any other body corporate, except for the options mentioned in paragraph 4 of the Directors’ statement.

3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The directors of the Company holding office at the end of the financial year had no interests in the share capital and
debentures of the Company and related corporations except as follows:

Name of directors and company At January 1, At December At January 21,

in which interests are held 2022 31, 2022 2023

Interest in Sunpower Group Ltd.

Ordinary shares

Guo Hong Xin (deemed interest) (1) 153,638,554 153,638,554 153,638,554

Ma Ming (deemed interest) (1)
137,509,737 137,509,737 137,509,737

(1) The directors are deemed to be interested in the shares held by investment holding companies wholly owned by them respectively

ANNUAL REPORT 2022 57

DIRECTORS’
STATEMENT
4 SHARE OPTIONS

(a) Options to take up unissued shares

The Sunpower Employee Share Option Scheme 2015 (the “2015 ESOS”) is administered by the Remuneration
Committee which comprises:

Lau Ping Sum Pearce (Chairman)

Chin Sek Peng
Li Lei
Wang Daofu
Wang Guannan

Subject to the absolute discretion of the Remuneration Committee, Controlling Shareholders and their Associates (as
defined in the circular to the shareholders dated April 6, 2015) are eligible to participate in the 2015 ESOS, provided
that the participation of each Controlling Shareholder or his Associate and each grant of an option to any of them
may only be effected with the specific prior approval of independent shareholders in a general meeting by a separate
resolution as provided for in the circular to shareholders.

(b) Unissued shares under option and options exercised

The aggregate number of shares for which options can be granted under the 2015 ESOS is subject to the maximum
limit of 15% of the Company’s total number of issued shares (excluding treasury shares) for the entire ten-year
duration of the 2015 ESOS. Grants to Controlling Shareholders and their Associates shall not exceed 25% of the
shares available under the 2015 ESOS. In addition, grants to each Controlling Shareholder or his Associate shall not
exceed 10% of the shares available under the 2015 ESOS.

A total of 59,220,000 shares options were granted on May 19, 2015 under the 2015 ESOS which was approved by
shareholders on April 29, 2015 (the “Initial Grant”). Group Employees, Executive Directors, Non-Executive Directors,
Controlling Shareholders and their Associates (all as defined in 2015 ESOS) can participate in the 2015 ESOS.

A total of 44,330,000 options were granted to employees of the Group in FY2015.

An aggregate of 3,710,000 share options from the Initial Grant has lapsed from 2016 to 2020. In 2021, the Company
has granted a total of 3,710,000 share options, a number that is equivalent to the lapsed options. No options were
granted, lapsed or cancelled during the financial year ended December 31, 2022 (2021: No options were lapsed or
cancelled).

As of December 31, 2022, an aggregate of 58,029,000 options have been exercised, of which 55,319,000 options
were exercised at S$0.116, 210,000 options were exercised at S$0.272, 1,420,000 options were exercised at S$0.379,
and 1,080,000 options were exercised at S$0.312. The aggregated options outstanding were 1,191,000, of which
1,000,000 with exercise price S$0.308 and 191,000 with exercise price S$0.116 and all exerciseable up to May 19,
2025.

58 SUNPOWER GROUP LTD.

DIRECTORS’
STATEMENT
Except as disclosed below:

a. no participant has received 5% or more of the total options available under this scheme; and

b. no options were granted to any of the Company’s Controlling Shareholders or their Associates (as defined in the Singapore
Exchange Securities Trading Limited (“SGX-ST”)’s Listing Manual).

Aggregate Aggregate Aggregate

options options options
granted since exercised since lapsed since Aggregate
commencement commencement commencement options
Options granted of the Scheme of the Scheme of the Scheme outstanding as
during the to the end of to the end of to the end of at the end of
Name of participant financial year financial year financial year financial year financial year

(’000) (’000) (’000) (’000) (’000)

Guo Hong Xin (Director) – 5,922 (5,922) – –

Ma Ming (Director) – 8,968 (8,968) – –

5 AUDIT COMMITTEE

The Board has adopted the principles of corporate governance as described in the Code of Corporate Governance
formulated by the Singapore Exchange Securities Trading Limited (“SGX-ST”) with regards to the Audit Committee.

The Audit Committee of the Company is chaired by Chin Sek Peng, and include Lau Ping Sum Pearce and Yang Zheng. All
the members of the Audit Committee are independent directors of the Company.

The Audit Committee has met four times during the financial year ended December 31, 2022. The Audit Committee has
reviewed the following, where relevant, with the executive directors and the external and internal auditors of the Company:

a. The results of the external and internal auditors’ examination and evaluation of the Group’s systems of internal
accounting controls;

b. The Group’s financial and operating results and accounting policies;

c. The audit plans of the external and internal auditors;

d. The statement of financial position and statement of changes in equity of the Company and the consolidated financial
statements of the Group before their submission to the directors of the Company and external auditor’s report on
those financial statements;

e. The quarterly, half-yearly and annual results announcements as well as the related press release of the Group;

f. The co-operation and assistance given by management to the Group’s external auditor and internal auditor; and

g. The re-appointment of the external auditor of the Group.

The Audit Committee has full access to and co-operation of the management and has been given the resources required
for it to discharge its functions properly. It also has full discretion to invite any director and executive officer to attend its
meetings. The external and internal auditors have unrestricted access to the Audit Committee.

The Audit Committee has recommended to the directors the nomination of Deloitte & Touche LLP for re-appointment as
external auditor of the Group at the forthcoming annual general meeting of the Company.
6 AUDITOR

ANNUAL REPORT 2022 59

DIRECTORS’
STATEMENT
The auditor, Deloitte & Touche LLP, has expressed its willingness to accept re-appointment.

ON BEHALF OF THE BOARD

.........................................
Guo Hong Xin

.........................................
Ma Ming

60 SUNPOWER GROUP LTD.

INDEPENDENT
AUDITOR’S REPORT
TO THE MEMBERS OF SUNPOWER GROUP LTD.

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Sunpower Group Ltd. (the “Company”) and its subsidiaries (the “Group”), which
comprise the consolidated statement of financial position of the Group and the statement of financial position of the Company as at
December 31, 2022, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows of the Group and the statement of changes in equity of the Company
for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on
pages 65 to 171.

In our opinion, the accompanying consolidated financial statements of the Group and the statement of financial position and
statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Singapore
Financial Reporting Standards (International) (“SFRS(I)s”) so as to give a true and fair view of the consolidated financial position
of the Group and the financial position of the Company as at December 31, 2022 and of the consolidated financial performance,
consolidated changes in equity and consolidated cash flows of the Group and the statement of changes in equity of the Company
for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with Singapore Standards on Auditing (“SSAs”). Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of the Group in accordance with the Accounting and Corporate Regulatory Authority (“ACRA”) Code of Professional
Conduct and Ethics for Public Accountants and Accounting Entities (“ACRA Code”) together with the ethical requirements
that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.

ANNUAL REPORT 2022 61

INDEPENDENT
AUDITOR’S REPORT
TO THE MEMBERS OF SUNPOWER GROUP LTD.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter How the matter was addressed in the audit

(1) Revenue, cost and intangible assets arising We:

from Build-Operate-Transfer (“BOT”) projects • assessed the design and implementation and tested
(Refer to Notes 3.2(a), 16 and 29 to the financial operating effectiveness of internal controls over review of
statements) budgets submitted by contractors;
• assessed the design and implementation of internal
The Group has BOT projects which involve expenditure controls over confirmation of percentage of completion;
of costs during the construction phase to be recovered • performed substantive testing, including review of
from operating the facilities and selling steam and the revenue recognised based on the acknowledged
progress reports in order to determine that the revenue is
electricity in future.
recognised in accordance with the principles of revenue
recognition and are supported by signed contracts;
The Group recognises revenue in accordance with SFRS(I)
• analysed contracts with higher and lower margins to
15 Revenue from Contracts with Customers, namely determine the underlying reasons and verified these
revenue is recognised when (or as) the performance reasons at the start of construction;
obligations are satisfied. Intangible assets arising from • sent confirmation requests to confirm progress of
costs incurred during the construction phase which are construction contracts using the output method at year end;
projected to be recoverable during the operating period • used internal specialist to review reasonableness of gross
are recognised in accordance with SFRS(I) INT 12 Service profit margin of BOT projects at the start of construction;
Concession Arrangements. • performed test for cut-off of revenue and corresponding
matching of cost at year end; and
Significant estimates and judgement include the • reviewed credit notes issued throughout the year and
subsequent to year end.
following:

We reviewed the adequacy of disclosures in the financial

• Projection of total revenue which can be billed to
statements regarding accounting policies, significant
end users during the operating period.
management judgement and accounting estimates in Notes 2
• Evaluation of estimated profit margins for each of
and 3.2(a) to the financial statements respectively.
the construction and operating phases.
• Allocation of revenue between the construction and
service elements of the project.
• Recoverable amount of intangible assets which
represent cost recoverable from future operations.

62 SUNPOWER GROUP LTD.

INDEPENDENT
AUDITOR’S REPORT
TO THE MEMBERS OF SUNPOWER GROUP LTD.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR’S REPORT

THEREON

Management is responsible for the other information. The other information comprises the information included in the annual
report and the Directors’ Statement, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the 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 MANAGEMENT AND DIRECTORS FOR THE FINANCIAL

STATEMENTS

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the
SFRS(I)s, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance
that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that
they are recorded as necessary to permit the preparation of true and fair financial statements and to maintain accountability of
assets.

In preparing the financial statements, management is 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 management
either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The directors’ responsibilities include overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs 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 financial
statements.

ANNUAL REPORT 2022 63

INDEPENDENT
AUDITOR’S REPORT
TO THE MEMBERS OF SUNPOWER GROUP LTD.
As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout
the audit. We also:

a) Identify and assess the risks of material misstatement of the 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.

b) 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.

c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.

d) Conclude on the appropriateness of management’s 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 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.

e) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

f) 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 directors 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 directors 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, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the
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 Mr. Toh Yew Kuan Jeremy.

Deloitte & Touche LLP

Public Accountants and
Chartered Accountants
Singapore

March 25, 2023

64 SUNPOWER GROUP LTD.

STATEMENTS OF
FINANCIAL POSITION
December 31, 2022

GROUP COMPANY
Note 2022 2021 2022 2021
RMB’000 RMB’000 RMB’000 RMB’000
(Restated)

ASSETS

Current assets
Cash and cash equivalents 6 585,268 398,399 10,141 39,795
Pledged bank deposits 7 128,742 60,790 – –
Trade receivables 8 638,123 422,864 – –
Other receivables, deposits and prepayments 9 349,409 359,803 294,471 303,106
Inventories 10 175,315 122,706 – –
Financial assets at fair value through other
comprehensive income 12 50,458 3,010 – –
Total current assets 1,927,315 1,367,572 304,612 342,901

Non-current assets
Property, plant and equipment 11 632,439 646,147 – –
Other receivables, deposits and prepayments 9 44,722 58,956 129,660 83,660

Financial assets at fair value through other

comprehensive income 12 2,445 2,683 – –
Right-of-use assets 13 237,483 246,713 – –
Subsidiaries 14 – – 914,379 914,379
Associates 15 53,887 20,762 – –
Intangible assets 16 4,322,808 3,835,046 – –
Deferred tax assets 17 31,932 24,301 – –
Goodwill 18 415,582 415,582 – –
Total non-current assets 5,741,298 5,250,190 1,044,039 998,039

Total assets 7,668,613 6,617,762 1,348,651 1,340,940

LIABILITIES AND EQUITY

Current liabilities
Trade payables, other payables and contract liabilities 19 1,144,823 849,371 431,104 389,803
Borrowings 20 918,485 594,006 – –
Lease liabilities 22 1,646 1,652 – –
Convertible bonds 21 892,707 – 892,707 –
Income tax payable 6,763 31,445 – –
Total current liabilities 2,964,424 1,476,474 1,323,811 389,803

Non-current liabilities
Deferred tax liabilities 17 225,666 219,498 – –
Borrowings 20 2,424,490 2,142,726 – –
Convertible bonds 21 – 909,727 – 909,727
Lease liabilities 22 4,184 5,506 – –
Total non-current liabilities 2,654,340 3,277,457 – 909,727

ANNUAL REPORT 2022 65

STATEMENTS OF
FINANCIAL POSITION (CONT’D)
December 31, 2022

GROUP COMPANY

Note 2022 2021 2022 2021

RMB’000 RMB’000 RMB’000 RMB’000

(Restated)

Capital and reserves

Share capital 23 57,662 57,662 57,662 57,662
Treasury shares 24 – – – –
Share premium 25 313,653 313,653 313,653 313,653
General reserves 26 239,681 186,153 – –
Share option reserve 27 319 319 319 319
Foreign currency translation reserve – (190) – –
Revaluation reserve 28 (1,706) (1,209) – –
Retained earnings (Accumulated losses) 1,120,715 1,035,444 (346,794) (330,224)
Equity attributable to equity holders of the
Company 1,730,324 1,591,832 24,840 41,410
Non-controlling interests 319,525 271,999 – –
Total equity 2,049,849 1,863,831 24,840 41,410

Total liabilities and equity 7,668,613 6,617,762 1,348,651 1,340,940

See accompanying notes to financial statements.

66 SUNPOWER GROUP LTD.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS
ANDOTHER COMPREHENSIVE INCOME
Financial year ended December 31, 2022

GROUP

Note 2022 2021

RMB’000 RMB’000

(Restated)

Continuing operations
Revenue 29 3,448,606 2,929,534
Cost of sales (2,935,553) (2,601,555)
Gross profit 513,053 327,979
Other operating income 30 22,415 143,155
Selling and distribution expenses (60,352) (40,022)
Administrative expenses (92,871) (131,254)
Other operating expenses 31 (81,788) (42,812)
Finance costs 32 (232,488) (638,612)
Share of profit of associate 15 1,649 1,939
Fair value changes on convertible bonds 21 150,656 486,212
Gain on disposal of subsidiaries 38 12,820 934,334
Profit before income tax 33 233,094 1,040,919
Income tax expense 34 (46,298) (241,914)
Profit for the year from continuing operations 186,796 799,005

Discontinued operations
Profit for the year from discontinued operations 37 – 27,559
Profit for the year 186,796 826,564

Other comprehensive loss

Items that may be reclassified subsequently to profit or loss

Exchange difference on translation of foreign operation 190 (41)

Net fair value loss on investments in equity instruments designated as at FVTOCI (179) (189)
Net fair value loss on investments in debt instruments classified as at FVTOCI (350) (514)

Other comprehensive loss for the year, net of tax (339) (744)

Total comprehensive income for the year 186,457 825,820

Profit for the year attributable to:

Equity holders of the Company 138,799 816,199
Non-controlling interests 47,997 10,365
Profit for the year 186,796 826,564

Total comprehensive income for the year attributable to:

Equity holders of the Company 138,492 815,420
Non-controlling interests 47,965 10,400
Total comprehensive income for the year 186,457 825,820

ANNUAL REPORT 2022 67

CONSOLIDATED STATEMENT OF PROFIT OR LOSS
ANDOTHER COMPREHENSIVE INCOME (CONT’D)
Financial year ended December 31, 2022

GROUP

Note 2022 2021

RMB’000 RMB’000

(Restated)

Earnings per share (RMB cents)

From continuing and discontinued operations

- Basic 35 17.44 102.81

- Diluted 35 9.26 36.50

From continuing operations

- Basic 35 17.44 99.48

- Diluted 35 9.26 34.21

See accompanying notes to financial statements.

68 SUNPOWER GROUP LTD.

 Equity
attributable
Share Foreign to equity
Share Treasury Share General option currency Revaluation holders Non-
capital shares premium reserves reserve translation reserve Retained of the controlling
(Note 23) (Note 24) (Note 25) (Note 26) (Note 27) reserve (Note 28) earnings Company interests Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

ANNUAL REPORT 2022

GROUP

Balance as at January 1,
2021 57,251 (4,690) 309,061 295,978 1,346 (149) 363 1,011,993 1,671,153 313,318 1,984,471
Adoption of SFRS(I) 1-16
(Note 44) – – – – – – – 20,351 20,351 9,476 29,827
Financial year ended December 31, 2022

Balance as at January 1,
2021(Restated) 57,251 (4,690) 309,061 295,978 1,346 (149) 363 1,032,344 1,691,504 322,794 2,014,298
Total comprehensive income
for the year:
STATEMENTS OF

Profit for the year(Restated) – – – – – – – 816,199 816,199 10,365 826,564

Other comprehensive (loss)
income for the year – – – – – (41) (738) – (779) 35 (744)
Total – – – – – (41) (738) 816,199 815,420 10,400 825,820
CHANGES IN EQUITY

Transactions with owners,

recognised directly in
equity:
Dividend paid (Note 36) – – – – – – – (936,609) (936,609) – (936,609)
Dividend paid to non-
controlling interest of a
subsidiary – – – – – – – – – (3,026) (3,026)
Transfer to general
reserves (Note 26)
(restated) – – – 41,070 – – – (41,070) – – –
Acquisition of non-
controlling interest of a
subsidiary (Note 26) – – – 12,851 – – – – 12,851 (13,483) (632)
Disposal of subsidiaries
(Notes 26, 28 and 38) – – – (163,746) – – (834) 164,580 – (44,686) (44,686)
Employee share option
expenses 250 – 4,922 – (1,027) – – – 4,145 – 4,145
Treasury shares re-issued 161 4,690 (330) – – – – – 4,521 – 4,521
Total 411 4,690 4,592 (109,825) (1,027) – (834) (813,099) (915,092) (61,195) (976,287)

69
Balance as at December
31, 2021(Restated) 57,662 – 313,653 186,153 319 (190) (1,209) 1,035,444 1,591,832 271,999 1,863,831
 Equity

70
attributable
Share Foreign to equity
Share Treasury Share General option currency Revaluation holders Non-
capital shares premium reserves reserve translation reserve Retained of the controlling
(Note 23) (Note 24) (Note 25) (Note 26) (Note 27) reserve (Note 28) earnings Company interests Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

GROUP

Balance as at January 1,
2022 (Restated) 57,662 – 313,653 186,153 319 (190) (1,209) 1,035,444 1,591,832 271,999 1,863,831
Total comprehensive
Financial year ended December 31, 2022

income for the year:

Profit for the year – – – – – – – 138,799 138,799 47,997 186,796
Other comprehensive
STATEMENTS OF

(loss) income for the

year – – – – – 190 (497) – (307) (32) (339)
Total – – – – – 190 (497) 138,799 138,492 47,965 186,457

Transactions with owners,

recognised directly in
equity:
Transfer to general
reserves (Note 26) – – – 53,528 – – – (53,528) – – –
Disposal of subsidiaries
(Note 38) – – – – – – – – – (439) (439)
Total – – – 53,528 – – – (53,528) – (439) (439)
CHANGES IN EQUITY (CONT’D)

Balance as at December
31, 2022 57,662 – 313,653 239,681 319 – (1,706) 1,120,715 1,730,324 319,525 2,049,849

SUNPOWER GROUP LTD.

STATEMENTS OF
CHANGES IN EQUITY (CONT’D)
Financial year ended December 31, 2022

Equity
attributable
Share to equity
Share Treasury Share option holders of
capital shares premium reserve Retained the
(Note 23) (Note 24) (Note 25) (Note 27) earnings Company Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

COMPANY

Balance as at January 1,
2021 57,251 (4,690) 309,061 1,346 (699,520) (336,552) (336,552)

Profit for the year,

representing
total comprehensive income
for the year – – – – 1,305,905 1,305,905 1,305,905

Transactions with owners,

recognised directly in
equity:
Dividend paid (Note 36) – – – – (936,609) (936,609) (936,609)
Employee share option
expenses 250 - 4,922 (1,027) – 4,145 4,145
Treasury shares re-issued 161 4,690 (330) – – 4,521 4,521
Total 411 4,690 4,592 (1,027) 369,296 377,962 377,962

Balance as at December
31, 2021 57,662 – 313,653 319 (330,224) 41,410 41,410

Profit for the year,

representing
total comprehensive income
for the year – – – – (16,570) (16,570) (16,570)

Total – – – – (16,570) (16,570) (16,570)

Balance as at December
31, 2022 57,662 – 313,653 319 (346,794) 24,840 24,840

See accompanying notes to financial statements.

ANNUAL REPORT 2022 71

CONSOLIDATED STATEMENT
OF CASH FLOWS
Financial year ended December 31, 2022

GROUP
2022 2021
RMB’000 RMB’000
(Restated)

Operating activities
Profit before income tax (Note C) 233,094 1,074,213
Adjustments for:
Depreciation of property, plant and equipment 50,037 61,027
Depreciation of right-of-use asset 6,512 7,580
Amortisation of intangible assets 147,086 108,385
Interest expense 232,488 646,736
Exchange differences arising on foreign currency translation (419) (545)
Share of profit of associate (1,649) (1,939)
Net loss (Gain) on disposal of property, plant and equipment (Note D) 6,036 (67,711)
Gain on disposal of right-of-use asset (Note D) – (4,343)
Gain on disposal of subsidiaries (Note 38) (12,820) (934,334)
Expenses on disposal of subsidiaries (Note 38) – 41,075
Impairment allowance on inventories, net of allowance – 1,759
Interest income (3,377) (4,982)
Impairment loss on trade and other receivables subject to ECL, net 2,053 15,142
(Reversal of) Impairment loss on pledged bank deposits (3,000) 3,081
Exchange loss (gain) on convertible bonds 72,695 (17,702)
Fair value gain on convertible bonds (150,656) (486,212)
Operating cash flows before movements in working capital 578,080 441,230

Trade receivables (216,911) (574,384)

Other receivables and prepayments 11,541 (247,484)
Financial assets at fair value through other comprehensive income (47,916) (66,470)
Inventories (52,609) (428,984)
Trade payables, other payables and contract liabilities 245,358 1,294,637
Cash generated from operations 517,543 418,545

Income tax paid (69,581) (83,033)

Interest received 3,377 4,982
Interest paid (146,166) (133,210)
Net cash from operating activities 305,173 207,284

Investing activities
Purchase of property, plant and equipment (Note A) (61,321) (93,486)
Prepayment for build-operate-transfer (“BOT”) projects (56,716) (36,120)
Acquisition of intangible assets (Note B) (474,979) (853,690)
Proceeds from disposal of subsidiaries (Note 38) 571 1,455,140
Payment for expenses on disposal of subsidiaries (Note 38) – (52,070)
Proceeds from disposal of right-of-use asset – 38,043
Acquisition of non-controlling interest (Note 14) – (1,502)
Payment of deferred consideration relating to acquisition of subsidiaries (7,183) (6,701)
Acquisition of an associate (31,476) (6,800)
Proceeds from disposal of property, plant and equipment (Note D) 6,396 45,314
Net cash (used in) from investing activities (624,708) 488,128

72 SUNPOWER GROUP LTD.

CONSOLIDATED STATEMENT
OF CASH FLOWS (CONT’D)
Financial year ended December 31, 2022

GROUP

2022 2021

RMB’000 RMB’000
(Restated)

Financing activities
Proceeds from new borrowings 1,635,050 2,301,473
Pledged bank deposits (64,952) (14,329)
Payment of dividend – (936,609)
Payment of dividend to non-controlling interest of a subsidiary – (3,026)
Repayment of borrowings (1,028,807) (1,731,256)
Repayments of lease liabilities (1,465) (1,888)
Proceeds from exercise of share options – 2,962
Treasury shares re-issued – 4,521
Interest paid (33,612) (453,311)
Net cash from (used in) financing activities 506,214 (831,463)

Net increase (decrease) in cash and cash equivalents 186,679 (136,051)

Cash and cash equivalents at beginning of year 398,399 534,491
Effects of foreign exchange rate changes 190 (41)
Cash and cash equivalents at end of year (Note 6) 585,268 398,399

ANNUAL REPORT 2022 73

CONSOLIDATED STATEMENT
OF CASH FLOWS (CONT’D)
Financial year ended December 31, 2022

Note A

At the end of the reporting period, RMB47,120,000 (2021 : RMB55,801,000) of additions to property, plant and equipment remain
unpaid.

Note B

2022 2021
RMB’000 RMB’000

(Reclassified)

Acquisition unpaid as at beginning of the year 287,177 117,236

Additions during the year (Note 16) 634,848 1,023,631
Less: Transferred from prepayment for build-operate-transfer (“BOT”) projects (70,984) –
Less: Cash outflows during the year (474,979) (853,690)
Acquisition unpaid as at end of the year 376,098 287,177

The cash outflows of RMB474,979,000 (2021 : RMB 853,690,000) during the year includes payments for intangible assets
acquired in previous financial year.

Note C

The amount reflected as profit before income tax in the consolidated statement of cash flows (indirect method) is derived from
the aggregate of profit before income tax from discontinued operation RMBNil (2021 : RMB33,294,000) (Note 37) and profit
before income tax from continuing operations RMB 233,094,000 (2021 : Profit before income tax from continuing operations
RMB1,040,919,000 (Restated)).

Note D

In 2019, Government of Xintai(“the Government”) and Xintai Zhengda Thermoelectric Co., Ltd. (“Xintai”) entered into an
agreement to compensate Xintai for relocation. The Government agreed to provide relocation allowance of RMB120,957,000 and
RMB38,043,000 as compensation to Xintai for the disposal of property, plant and equipment, and right-of-use asset, respectively.

In 2021, Xintai completed the relocation and the carrying amount of the disposed property, plant and equipment, and right-of-use
asset were RMB58,683,000 and RMB33,700,000, respectively, and the gain on diposal of property, plant and equipment, and
right-of-use asset were RMB62,274,000 and RMB4,343,000, respectively.

In 2022, 2021 and 2019, Xintai received relocation allowance of RMB3,000,000, RMB44,750,000 and RMB39,750,000, respectively
from the Government. As of December 31, 2022, the outstanding amount of RMB71,500,000 (2021 : RMB74,500,000) was
included in other receivbles due from third parties (Note 9).

In 2021, other than the mentioned relocation, the Group disposed property, plant and equipment to third parties with consideration
of RMB39,873,000. The carrying amount of the disposed property, plant and equipment were RMB34,436,000 and the gain on
diposal of property, plant and equipment were RMB5,437,000. The Group received RMB38,607,000 during the financial year and
the outstanding amount of RMB1,266,000 was included in other receivbles due from third parties (Note 9).

In 2022, the Group disposed property, plant and equipment to third parties with consideration of RMB6,396,000 received during
the financial year. The carrying amount of the disposed property, plant and equipment were RMB12,432,000 and the loss on
diposal of property, plant and equipment were RMB6,036,000.

See accompanying notes to financial statements.

74 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

1 GENERAL

The Company (Registration Number 35230) is incorporated in Bermuda, under the Companies Act 1981 of Bermuda,
with its registered office at Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM 10, Bermuda and principal place of
business at No. 2111 Chengxin Road, Nanjing Jiangning Science Park, Nanjing, China 211112. The Company is listed on
the Singapore Exchange Securities Trading Limited.

The financial statements are expressed in Chinese Renminbi (“RMB”).

The principal activity of the Company is that of investment holding.

The principal activities of the subsidiaries and associates are detailed in Notes 14 and 15 to the financial statements
respectively.

The consolidated financial statements of the Group and statement of financial position and statement of changes in equity
of the Company for the year ended December 31, 2022 were authorised for issue by the Board of Directors on March 25,
2023.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING - The financial statements have been prepared in accordance with the historical cost basis,
except as disclosed below, and are drawn up in accordance with the provisions of Singapore Financial Reporting Standards
(International) (“SFRS(I)s”).

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

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, regardless of whether that price is directly observable or estimated
using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account
the characteristics of the asset or liability which market participants would take into account when pricing the asset or
liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial
statements is determined on such a basis, except for share-based payment transactions that are within the scope of
SFRS(I) 2 Share-based Payment, leasing transactions that are within the scope of SFRS(I) 16 Leases, and measurements
that have some similarities to fair value but are not fair value, such as net realisable value in SFRS(I) 1-2 Inventories or value
in use in SFRS(I) 1-36 Impairment of Assets.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability,
either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

ANNUAL REPORT 2022 75

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

ADOPTION OF NEW AND REVISED FINANCIAL STANDARDS - On January 1, 2022, the Group and the Company
adopted all the new and revised SFRS(I)s pronouncements that are relevant to its operations. Except for adoption of the
amendments to SFRS(I) 1-16 Property, Plant and Equipment: Proceeds before Intended Use as discussed in Note 44, the
adoption of these new/ revised SFRS(I)s pronouncements does not result in changes to the Group’s and the Company’s
accounting policies and has no material effect on the amounts reported for the current or prior years.

At the date of these financial statements, the following SFRS(I)s and amendments to SFRS(I)s that are relevant to the Group
and the Company were issued but not effective:

Effective for annual periods beginning on or after January 1, 2023

• SFRS(I) 17 Insurance Contracts (including November 2020 and December 2021 Amendments to SFRS(I) 17)
• Amendments to SFRS (I) 1-1 and SFRS(I) Practice Statement 2: Disclosure of Accounting Policies
• Amendments to SFRS (I) 1- 8: Definition of Accounting Estimates
• Amendments to SFRS(I) 1-12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction

Effective for annual periods beginning on or after January 1, 2024

• Amendments to SFRS(I) 1-1: Classification of Liabilities as Current or Non-current

• Amendments to SFRS(I) 1-1: Non-current Liabilities with Covenants
• Amendments to SFRS(I) 16: Lease Liability in a Sale and Leaseback

Effective date is deferred indefinitely

• Amendments to SFRS(I) 10 Consolidated Financial Statements and SFRS(I) 1-28 Investments in Associates and Joint
Ventures: Sale or Contribution of Assets between Investor and its Associate or Joint Venture

Management anticipates that the adoption of the above amendments to SFRS(I) in future periods will not have a material
impact on the financial statements in the period of their initial adoption.

BASIS OF CONSOLIDATION - The consolidated financial statements incorporate the financial statements of the Company
and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the
Company:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control listed above.

76 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the
voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The
Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an
investee are sufficient to give it power, including:

• the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote
holders;

• potential voting rights held by the Company, other vote holders or other parties;

• rights arising from other contractual arrangements; and

• any additional facts and circumstances that indicate that the Company has, or does not have, the current ability
to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous
shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company
loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year
are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company
gains control until the date when the Company ceases to control the subsidiary.

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests
of non-controlling shareholders that are present ownership interests entitling their holders to a proportionate share
of net assets upon liquidation may initially be measured at fair value or at the non-controlling interests’ proportionate
share of the fair value of the acquiree’s identifiable net assets. The choice of measurement is made on an acquisition-
by-acquisition basis. Other non-controlling interests are initially measured at fair value. Subsequent to acquisition,
the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the
non-controlling interests’ share of subsequent changes in equity.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the
non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to
the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line
with the Group’s accounting policies.

All intragroup assets, liabilities, equity, income, expenses and cash flows relating to transactions between the members of
the group are eliminated on consolidation.

Changes in the Group’s interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in
their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners
of the Company.

When the Group loses control of a subsidiary, the gain or loss on disposal recognised in profit or loss is calculated as
the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained
interest and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary and any
non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary
are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified
to profit or loss or transferred to another category of equity as required/permitted by applicable SFRS(I) Standards). The
fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value
on initial recognition for subsequent accounting under SFRS(I) 9, when applicable, or the cost on initial recognition of an
investment in an associate or a joint venture.

ANNUAL REPORT 2022 77

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

In the Company’s separate financial statements, investment in subsidiaries is carried at cost less any impairment in net
recoverable value that has been recognised in profit or loss.

BUSINESS COMBINATIONS - Acquisitions of businesses are accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair
values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the
equity interest issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the
acquisition date, except that:

• Deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and
measured in accordance with SFRS(I) 1-12 Income Taxes and SFRS(I) 1-19 Employee Benefits respectively;

• Liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based
payment arrangements of the group entered to replace share-based payment arrangements of the acquiree are
measured in accordance with SFRS(I) 2 Share-based Payment at the acquisition date; and

• Assets (or disposal groups) that are classified as held for sale in accordance with SFRS(I) 5 Non-Current Assets Held
for Sale and Discontinued Operations are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment,
the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the
consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s
previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase
gain.

When the consideration transferred by the Group in a business combination includes a contingent consideration arrangement,
the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration
transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement
period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period
adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which
cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement
period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified
as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity.
Other contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value
recognised in profit or loss.

When a business combination is achieved in stages, the Group’s previously held interests (including joint operations) in the
acquired entity are remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit
or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised
in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest
were disposed of.

78 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to
reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would
have affected the amounts recognised as of that date.

NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS - Non-current assets (and disposal
groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a
sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable
and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed
to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of
classification.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that
subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will
retain a non-controlling interest in its former subsidiary after the sale.

When the Group is committed to a sale plan involving disposal of an investment in an associate or, a portion of an
investment in an associate, the investment, or the portion of the investment in the associate, that will be disposed of is
classified as held for sale when the criteria described above are met. The Group then ceases to apply the equity method in
relation to the portion that is classified as held for sale. Any retained portion of an investment in an associate that has not
been classified as held for sale continues to be accounted for using the equity method.

A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and:

(a) represents a separate major line of business or geographical area of operations,

(b) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations or

(c) is a subsidiary acquired exclusively with a view to resale.

FINANCIAL INSTRUMENTS - Financial assets and financial liabilities are recognised on the statement of financial position
when the Group becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair
value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in profit or loss.

ANNUAL REPORT 2022 79

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial assets

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular
way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace.

All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending
on the classification of the financial assets.

Classification of financial assets

Debt instruments that meet the following conditions are subsequently measured at amortised cost:

• the financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.

Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive
income (FVTOCI):

• the financial asset is held within a business model whose objective is achieved by both collecting contractual cash
flows and selling the financial assets; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.

By default, all other financial assets are subsequently measured at fair value through profit or loss (FVTPL).

Despite the aforegoing, the Group may make the following irrevocable election/designation at initial recognition of a
financial asset:

• the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other
comprehensive income if certain criteria are met; and

• the Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as measured
at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.

Amortised cost and effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest
income over the relevant period.

For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-impaired
on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including
all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other
premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where
appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition. For purchased
or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the
estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial
recognition.

80 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial assets (cont’d)

Amortised cost and effective interest method (cont’d)

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus
the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between
that initial amount and the maturity amount, adjusted for any loss allowance. On the other hand, the gross carrying amount
of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised
cost and at FVTOCI. For financial instruments other than purchased or originated credit-impaired financial assets, interest
income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for
financial assets that have subsequently become credit-impaired. For financial assets that have subsequently become
credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial
asset. If, in subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the
financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross
carrying amount of the financial asset.

For purchased or originated credit-impaired financial assets, the Group recognises interest income by applying the credit-
adjusted effective interest rate to the amortised cost of the financial asset from initial recognition. The calculation does not
revert to the gross basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no
longer credit-impaired.

Interest income is recognised in profit or loss and is included in the “other operating income” line item.

Debt instruments classified as at FVTOCI

Notes receivables held by the Group are classified as at FVTOCI. Fair value is determined in the manner described in
Note 4(e). The notes receivables are initially measured at fair value. Subsequently, changes in the carrying amount of
these receivable notes as a result of foreign exchange gains and losses, impairment gains or losses, and interest income
calculated using the effective interest method are recognised in profit or loss. The amounts that are recognised in profit
or loss are the same as the amounts that would have been recognised in profit or loss if these notes receivables had
been measured at amortised cost. All other changes in the carrying amount of these notes receivables are recognised in
other comprehensive income and accumulated under the heading of investments revaluation reserve. When these notes
receivables are derecognised, the cumulative gains or losses previously recognised in other comprehensive income are
reclassified to profit or loss.

ANNUAL REPORT 2022 81

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial assets (cont’d)

Equity instruments designated as at FVTOCI

On initial recognition, the Group may make an irrevocable election (on an instrument-by-instrument basis) to present in
other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is neither
held for trading nor contingent consideration recognised by an acquirer in a business combination to which SFRS(I) 3
applies.

Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they
are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive
income and accumulated in the investments revaluation reserve. The cumulative gain or loss is not reclassified to profit or
loss on disposal of the equity investments, instead, it is transferred to retained earnings.

Dividends on these investments in equity instruments are recognised in profit or loss in accordance with SFRS(I) 9, unless
the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in the ‘Finance
income – other’ line item in profit or loss.

The Group designated all investments in equity instruments that are not held for trading as at FVTOCI on initial recognition
(Note 12).

A financial asset is held for trading if either:

• it has been acquired principally for the purpose of selling it in the near term; or

• on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and
has evidence of a recent actual pattern of short-term profit-taking; or

• it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging
instrument).

Foreign exchange gains and losses

The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency
and translated at the spot rate as at each reporting date. Specifically,

• for financial assets measured at amortised cost that are not part of a designated hedging relationship, exchange
differences are recognised in profit or loss in the “other operating expenses” line item;

• for debt instruments measured at FVTOCI that are not part of a designated hedging relationship, exchange differences
on the amortised cost of the debt instrument are recognised in profit or loss in the “other operating expenses” line
item;

• for equity instruments measured at FVTOCI, exchange differences are recognised in other comprehensive income in
the investments revaluation reserve.

82 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial assets (cont’d)

Impairment of financial assets

The Group recognises a loss allowance for expected credit losses (“ECL”) on trade receivables and other receivables. The
amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition
of the respective financial instrument.

The Group always recognises lifetime ECL for trade receivables. The expected credit losses on these financial assets
are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that
are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast
direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit
risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly
since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month
ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or
risk of a default occurring since initial recognition instead of on evidence of a financial asset being credit-impaired at the
reporting date or an actual default occurring.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life
of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from
default events on a financial instrument that are possible within 12 months after the reporting date.

Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default
occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers
both quantitative and qualitative information that is reasonable and supportable, including historical experience and
forward-looking information that is available without undue cost or effort. Forward-looking information considered includes
the future prospects of the industries in which the Group’s debtors operate, obtained from economic expert reports,
financial analysts, governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of
various external sources of actual and forecast economic information that relate to the Group’s core operations, namely
manufacturing and sale of heat exchangers and pressure vessels, pipeline energy saving products, supply of steam, heat
and electricity, and provision of design, consultancy and technology services.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly
since initial recognition:

• an actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit
rating; or

• existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a
significant decrease in the debtor’s ability to meet its debt obligations; or

• an actual or expected significant deterioration in the operating results of the debtor; or

• an actual or expected significant adverse change in the regulatory, economic, or technological environment of the
debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

ANNUAL REPORT 2022 83

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial assets (cont’d)

Significant increase in credit risk (cont’d)

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial asset has
increased significantly since initial recognition when contractual payments are past due, unless the Group has reasonable
and supportable information that demonstrates otherwise.

Despite the aforegoing, the Group assumes that the credit risk on a financial instrument has not increased significantly
since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial
instrument is determined to have low credit risk if i) the financial instrument has a low risk of default, ii) the borrower has
a strong capacity to meet its contractual cash flow obligations in the near term and iii) adverse changes in economic and
business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual
cash flow obligations. The Group considers a financial asset to have low credit risk when it has an internal or external credit
rating of “investment grade” as per globally understood definition.

For financial guarantee contracts, the date that the Group becomes a party to the irrevocable commitment is considered to
be the date of initial recognition for the purposes of assessing the financial instrument for impairment. In assessing whether
there has been a significant increase in the credit risk since initial recognition of a financial guarantee contract, the Group
considers the changes in the risk that the specified debtor will default on the contract.

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase
in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in
credit risk before the amount becomes past due.

Definition of default

The Group considers the following as constituting an event of default for internal credit risk management purposes as
historical experience indicates that receivables that meet either of the following criteria are generally not recoverable.

• when there is a breach of financial covenants by the counterparty; or

• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its
creditors, including the Company, in full (without taking into account any collaterals held by the Group).

Irrespective of the above analysis, the Group considers that default has occurred when there is evidence that a financial
asset is credit impaired unless the Group has reasonable and supportable information to demonstrate that a more lagging
default criterion is more appropriate.

Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash
flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data
about the following events:

84 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial assets (cont’d)

Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash
flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data
about the following events:

a) significant financial difficulty of the issuer or the borrower; or

b) a breach of contract, such as a default or past due event; or

c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having
granted to the borrower a concession(s) that the lender(s) would not otherwise consider; or

d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or

e) the disappearance of an active market for that financial asset because of financial difficulties.

Write-off policy

The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial
difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or
has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over two years past
due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Group’s
recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or
loss.

Measurement and recognition of expected credit losses

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude
of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given
default is based on historical data adjusted by forward-looking information as described above. As for the exposure
at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date; for loan
commitments and financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date
together with any additional amounts expected to be drawn down in the future by default date determined based on
historical trend, the Group’s understanding of the specific future financing needs of the debtors, and other relevant forward-
looking information.

For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due
to the Group in accordance with the contract and all the cash flows that the group expects to receive, discounted at the
original effective interest rate.

For a financial guarantee contract, as the Group is required to make payments only in the event of a default by the debtor
in accordance with the terms of the instrument that is guaranteed, the expected loss allowance is the expected payments
to reimburse the holder for a credit loss that it incurs less any amounts that the Group expects to receive from the holder,
the debtor or any other party.

ANNUAL REPORT 2022 85

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial assets (cont’d)

Measurement and recognition of expected credit losses (cont’d)

Where lifetime ECL is measured on a collective basis to cater for cases where evidence of significant increases in credit
risk at the individual instrument level may not yet be available, the financial instruments are grouped on the following basis:

• Nature of financial instruments;

• Past-due status;
• Nature, size and industry of debtors;
• Nature of collaterals for other receivables; and
• External credit ratings where available.

The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar credit
risk characteristics.

If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous
reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the
Group measures the loss allowance at an amount equal to 12-month ECL at the current reporting date.

The Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment
to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured
at FVTOCI, for which the loss allowance is recognised in other comprehensive income and accumulated in the investment
revaluation reserve, and does not reduce the carrying amount of the financial asset in the statement of financial position.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If
the Group neither transfers nor retains substantially all the risk and rewards of ownership and continues to control the
transferred asset, the Group recognises its retained interest in the assets and an associated liability for amounts it may
have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the
Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition of
an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously accumulated in the
investments revaluation reserves is reclassified to profit or loss. In contrast, on derecognition of an investment in equity
instrument which the group has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously
accumulated in the investments revaluation reserves is not reclassified to profit or loss, but is transferred to retained
earnings.

86 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the
contractual arrangements and the definitions of a financial liability and an equity instrument.

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. Equity instruments issued by a Group entity are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

Convertible bonds

The Group’s convertible bonds consist of a debt host liability component and a derivative liability component. The
component parts are classified as financial liabilities in accordance with the substance of the contractual arrangement.

At the date of issue, the fair value of the derivative liability component is estimated using the Binomial model. This amount
is recorded as a liability at fair value, and is subsequently remeasured at the end of each financial period with changes in
fair value recognised in profit or loss.

At the date of issue, the fair value of the debt host liability component is determined by deducting the amount of the
derivative liability component from the fair value of the convertible bonds as a whole. This is recorded as a liability on an
amortised cost basis until extinguished upon conversion or at the instrument’s maturity date.

Transaction costs that relate to the issue of the convertible bonds are offset against the nominal value of convertible bonds
issued.

Warrants

Warrants are classified as derivative liabilities. At the date of issue, the fair value of derivative liabilities are estimated using
the Binomial model. The amount is recorded as a liability at fair value, and is subsequently remeasured at the end of each
financial period with changes in fair value recognised in profit or loss.

Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.

However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the
continuing involvement approach applies, financial guarantee contracts issued by the Group, and commitments issued by
the Group to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies
set out below.

ANNUAL REPORT 2022 87

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial liabilities and equity instruments (cont’d)

Financial liabilities at fair value through profit or loss (FVTPL)

Financial liabilities are classified as at FVTPL when the financial liability is i) contingent consideration of an acquirer in a
business combination to which SFRS(I) 3 applies, ii) held for trading, or iii) it is designated as at FVTPL.

A financial liability is classified as held for trading if:

• it has been acquired principally for the purpose of repurchasing it in the near term; or

• on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and
has a recent actual pattern of short-term profit-taking; or

• it is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging
instrument.

A financial liability other than a financial liability held for trading or contingent consideration of an acquirer in a business
combination may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise
arise; or

• the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and
its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or
investment strategy, and information about the group is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and SFRS(I) 9 permits the entire combined
contract to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value with any gains or losses arising on changes in fair value recognised
in profit or loss to the extent that they are not part of a designated hedging relationship. The net gain or loss recognised
in profit or loss incorporates any interest paid on the financial liabilities and is included in the “fair value changes on
convertible bonds” line item (Note 21).

However, for financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial
liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless
the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge
an accounting mismatch in profit or loss. The remaining amount of change in the fair value of liability is recognised in profit or
loss. Changes in fair value attributable to a financial liability’s credit risk that are recognised in other comprehensive income
are not subsequently reclassified to profit or loss; instead, they are transferred to retained earnings upon derecognition of
the financial liability.

Gains or losses on financial guarantee contracts and loan commitments issued by the Group that are designated by the
Group as at fair value through profit or loss are recognised in profit or loss.

Fair value is determined in the manner described in Note 4(e).

88 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Financial liabilities and equity instruments (cont’d)

Financial liabilities measured subsequently at amortised cost

Financial liabilities that are not 1) contingent consideration of an acquirer in a business combination, 2) held-for-trading, or
3) designated as at FVTPL, are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction
costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter
period, to the amortised cost of a financial liability.

Financial guarantee contract liabilities

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt
instrument.

Financial guarantee contract liabilities are measured initially at their fair values and, if not designated as at FVTPL and do
not arise from a transfer of a financial asset, are measured subsequently at the higher of:

• the amount of the loss allowance determined in accordance with SFRS(I) 9; and

• the amount recognised initially less, where appropriate, cumulative amortisation recognised in accordance with the
revenue recognition policies.

Foreign exchange gains and losses

For financial liabilities that are denominated in a foreign currency and are measured at amortised cost as at each reporting
date, the foreign exchange gains and losses are determined based on the amortised cost of the instruments. These foreign
exchange gains and losses are recognised in the “other income” and “other operating expenses” line item respectively in
profit or loss for financial liabilities that are not part of a designated hedging relationship.

The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated
at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign
exchange component forms part of the fair value gains or losses and is recognised in profit or loss for financial liabilities
that are not part of a designated hedging relationship.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they
expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and
payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

ANNUAL REPORT 2022 89

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Offsetting arrangements

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial positon when
the Company and the Group has a legally enforceable right to set off the recognised amounts; and intends either to settle
on a net basis, or to realise the asset and settle the liability simultaneously. A right to set-off must be available today rather
than being contingent on a future event and must be exercisable by any of the counterparties, both in the normal course of
business and in the event of default, insolvency or bankrupt.

LEASES

The Group as lessee

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-
of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except
for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these
leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the time pattern in which economic benefits from the
leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses the
incremental borrowing rate specific to the lessee.

The incremental borrowing rate depends on the term, currency and start date of the lease and is determined based on a
series of inputs including: the risk-free rate based on government bond rates; a country-specific risk adjustment; a credit
risk adjustment based on bond yields; and an entity-specific adjustment when the risk profile of the entity that enters into
the lease is different to that of the Group and the lease does not benefit from a guarantee from the Group.

Lease payments included in the measurement of the lease liability comprise:

• fixed lease payments (including in-substance fixed payments), less any lease incentives;

• variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement
date;

• the amount expected to be payable by the lessee under residual value guarantees;

• the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and

• payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the
lease.

The lease liability is presented as a separate line in the statement of financial position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

90 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

LEASES (cont’d)

The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

• the lease term has changed or there is a significant event or change in circumstances resulting in a change in the
assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the
revised lease payments using a revised discount rate; or

• the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed
residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the
initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a
revised discount rate is used); or

• a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the
lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the effective
date of the modification.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at
or before the commencement day, less any lease incentives received and any initial direct cost. They are subsequently
measured at cost less accumulated depreciation and impairment losses.

Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it
is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision
is recognised and measured under SFRS(I) 1-37. To the extent that the costs relate to a right-of-use asset, the costs are
included in the related right-of-use asset, unless those costs are incurred to produce inventories.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease
transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise
a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.

The right-of-use assets are presented as a separate line in the statement of financial position.

The Group applies SFRS(I) 1-36 to determine whether a right-of-use asset is impaired and accounts for any identified
impairment loss as described in Note 2 - Impairment of Tangible and Intangible Assets.

Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the
right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that
triggers those payments occurs and are included in the line ‘Other operating expenses’ in profit or loss.

As a practical expedient, SFRS(I) 16 permits a lessee not to separate non-lease components, and instead account for any
lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient.
For a contract that contains a lease component and one or more additional lease or non-lease components, the Group
allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the
lease component and the aggregate stand-alone price of the non-lease components.

ANNUAL REPORT 2022 91

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

LEASES (cont’d)

INVENTORIES - Inventories are stated at the lower of cost and net realisable value. Raw materials are stated at cost
calculated using the weighted average method. Work-in-progress is stated at cost plus recognised profits or losses less
progress billings made. Cost includes materials, direct labour and sub-contract costs. Net realisable value represents the
estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at cost, less accumulated depreciation
and any impairment losses.

Properties in the course of construction for production, supply or administration purpose, or for purposes not yet
determined, are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying
assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets, on the
same basis as other property assets, commences when the assets are ready for their intended use.

Depreciation is charged so as to write off the cost or valuation of assets, over their estimated useful lives, using the straight-
line method, on the following bases per annum:

Buildings – 5%
Leasehold improvements – 20%
Plant and machinery – 10%
Furniture, fixtures and equipment – 20%
Motor vehicles – 20%

No depreciation is provided on construction-in-progress.

Fully depreciated assets are retained in the financial statements until they are no longer in use.

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any
changes in estimate accounted for on a prospective basis.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss.

GOODWILL - Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the
acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-
controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over
net of the acquisition-date amounts of the identifiable assets acquired net of liabilities assumed.

If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the
consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s
previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain
purchase gain.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill
is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-
generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is
an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying
amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then
to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary or the relevant cash generating unit, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.

92 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

INTANGIBLE ASSETS

Intangible assets acquired separately

Intangible assets acquired separately are reported at cost less accumulated amortisation (where they have finite useful
lives) and accumulated impairment losses. Intangible assets with finite useful lives are amortised on a straight-line basis
over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual
reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets
with indefinite useful lives are not amortised. Each period, the useful lives of such assets are reviewed to determine whether
events and circumstances continue to support an indefinite useful life assessment for the asset. Such assets are tested for
impairment in accordance with the policy below.

Intangible assets arising from service concession arrangements are described in the following section “SERVICE
CONCESSION ARRANGEMENTS”

SERVICE CONCESSION ARRANGEMENTS - Service concession under build-operate-transfer (‘‘BOT”) arrangements

involve the Group constructing infrastructure in exchange for the right to operate the infrastructure and to charge for utilities
generated at the infrastructure for finite periods in the future, based on consumption of utilities by end-users in future. The
Group has entered into BOT arrangements in respect of construction and operation of centralised steam and electricity
facilities with the local government authorities. Under the terms of the arrangement, upon expiry of the respective BOT
arrangements, the infrastructure is transferrable to the local government if requested by the local government.

The Group recognises an intangible asset at fair value upon initial recognition (arising from business combination) when it
has a right to charge for usage in relation to a concession infrastructure. Subsequent to initial recognition, the intangible
asset is measured at cost less accumulated amortisation and any impairment loss. Amortisation is provided on straight-line
basis over the respective periods of the operating phase of the concession periods of the Group which is up to 38.5 years.

These service concession arrangements are accounted for under the principles of SFRS(I) INT 12 Service Concession
Arrangements.

Contractual obligations to restore the infrastructure to a specified level serviceability under service concession arrangements

Contractual obligations to maintain the infrastructure to a specified level of serviceability and/or restore the infrastructure
to a specified condition before they are handed over to the grantor of the concession at the end of the service concession
arrangement are recognised and measure in accordance with the policy set out for “Provisions” below.

Repair and maintenance and other expenses that are routine in nature and expensed and recognised in profit or loss as
incurred.

TECHNICAL KNOW-HOW AND TRADEMARK - The technical know-how and trademark are measured initially at purchase
cost and are amortised on a straight-line basis over its estimated useful life of 5 years and 10 years respectively.

ANNUAL REPORT 2022 93

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

INTANGIBLE ASSETS (cont’d)

LICENSES

Indefinite useful lives

The useful lives of the licenses are estimated to be indefinite based on the current practices in the local construction and
power industries where licenses may be renewed indefinitely at little cost, management believes there is no foreseeable
limit to the period over which the licenses are expected to generate net cash inflows for the Group.

Definite useful lives

Licenses that have finite useful lives are measured at cost and are amortised over the period of 36 years on a straight line
basis to profit or loss.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination are identified and recognised separately from goodwill. The cost of
such intangible assets is their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately.

ASSOCIATES - An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor
an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions
of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the
equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in
accordance with SFRS(I) 5 Non-current Assets Held for Sale and Discontinued Operations.

Under the equity method, an investment in an associate is recognised initially in the consolidated statement of financial
position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive
income of the associate. When the Group’s share of losses of an associate exceeds the Group’s interest in that associate
(which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the
Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the
Group has incurred legal or constructive obligations or made payments on behalf of the associate.

An investment in an associate is accounted for using the equity method from the date on which the investee becomes an
associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s share
of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within
the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and
liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in
which the investment is acquired.

The requirements of SFRS(I) 1-36 are applied to determine whether it is necessary to recognise any impairment loss with
respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including
goodwill) is tested for impairment in accordance with SFRS(I) 1-36 Impairment of Assets as a single asset by comparing
its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount, any impairment
loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in
accordance with SFRS(I) 1-36 to the extent that the recoverable amount of the investment subsequently increases.

94 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

INTANGIBLE ASSETS (cont’d)

LICENSES (cont’d)

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate, or
when the investment is classified as held for sale. When the Group retains an interest in the former associate and the
retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is
regarded as its fair value on initial recognition in accordance with SFRS(I) 9. The difference between the carrying amount of
the associate at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds
from disposing of a part interest in the associate or is included in the determination of the gain or loss on disposal of the
associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation
to that associate on the same basis as would be required if that associate had directly disposed of the related assets or
liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be
reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from
equity to profit or loss (as a reclassification adjustment) when the associate is disposed of.

When the Group reduces its ownership interest in an associate but the Group continues to use the equity method, the group
reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive
income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the
disposal of the related assets or liabilities.

When a Group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the
associate are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate
that are not related to the Group.

The Group applies SFRS(I) 9, including the impairment requirements, to long-term interests in an associate to which the
equity method is not applied and which form part of the net investment in the investee. Furthermore, in applying SFRS(I)
9 to long-term interests, the Group does not take into account adjustments to their carrying amount required by SFRS(I)
1-28 (i.e. adjustments to the carrying amount of long-term interests arising from the allocation of losses of the investee or
assessment of impairment in accordance with SFRS(I) 1-28).

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT, RIGHT-OF-USE ASSETS AND INTANGIBLE ASSETS
EXCLUDING GOODWILL - At each reporting date, the Group reviews the carrying amounts of its property, plant and
equipment, right-of-use assets and intangible assets to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine
the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other
assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-
generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and
consistent allocation basis can be identified.

Intangible assets with an indefinite useful life are tested for impairment at least annually and whenever there is an indication
at the end of a reporting period that the asset may be impaired.

Recoverable amount is the higher of 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 asset for which the estimates of future cash flows
have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is
treated as a revaluation decrease and to the extent that the impairment loss is greater than the related revaluation surplus,
the excess impairment loss is recognised in profit or loss.

ANNUAL REPORT 2022 95

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

INTANGIBLE ASSETS (cont’d)

LICENSES (cont’d)

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in prior years. A reversal of an impairment loss is recognised immediately in profit or loss to the extent that it eliminates the
impairment loss which has been recognised for the asset in prior years. Any increase in excess of this amount is treated
as a revaluation increase.

PROVISIONS - Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation
at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.  Where a
provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present
value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,
the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the
receivable can be measured reliably.

GOVERNMENT GRANTS - Government grants are not recognised until there is reasonable assurance that the Group will
comply with the conditions attaching to them and the grants will be received. The benefit of a government loan at a below-
market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair
value of the loan based on prevailing market interest rates. Government grants whose primary condition is that the Group
should purchase, construct or otherwise acquire non-current assets are recognised as deferred income in the statement
of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related
assets.

Other government grants are recognised as income over the periods necessary to match them with the costs for which they
are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses
or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs
are recognised in the profit or loss in the period in which they become receivable.

SHARE-BASED PAYMENTS - The Group issues equity-settled share-based payments to certain employees.

Equity-settled share-based payments are measured at fair value of the equity instruments at the date of grant. Details
regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 27. The
fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group’s estimate of the number of equity instruments that will eventually
vest. At the end of each reporting period, the Group revises its estimate of the number of equity instruments
expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such
that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee
benefits reserve.

96 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

INTANGIBLE ASSETS (cont’d)

LICENSES (cont’d)

REVENUE RECOGNITION - The Group recognises revenue from the following major sources:

• Sale of goods.
• Construction contracts.
• Revenue from service concession arrangements.
• Provision of utilities.
• Provision of other services.

Revenue is measured at based on the consideration specified in a contract with a customer and excludes amounts collected
on behalf of third parties. The Group recognises revenue at a point in time or over time depending on when it transfers
control of a product or service to a customer.

When either party to a contract has performed, the Group presents the contract in the statement of financial position as a
contract asset or a contract liability, depending on the relationship between the Group’s performance and the customer’s
payment. Any unconditional rights to consideration (i.e. amounts that relate to completed performance obligations for
which payment is due under the contract) should be presented separately as a receivable.

Sale of goods

The Group manufactures and sells heat pipes, heat pipe exchangers, pressure vessels, reactors, and GGH-Gas gas heater.

Revenue is recognised when control of the goods has transferred to the customer, being at the point the goods are
delivered to the customer. Delivery occurs when the goods have been shipped to the customer’s specific location. A
receivable is recognised by the Group upon delivery as this represents the point in time at which the right to consideration
becomes unconditional, as only the passage of time is required before payment.

Construction contracts

The Group sells customised energy saving products with proprietary heat transfer technologies which requires longer
duration to be fully constructed.

Revenue is recognised over time using the input method, i.e. based on the proportion of contract costs incurred for work
performed to date relative to the estimated total contract costs. Management considers that this input method is an
appropriate measure of the progress towards complete satisfaction of these performance obligations under SFRS(I) 15.

Construction contracts - EPC

The Group provides Engineering, Procurement, and Construction Integrated Solutions (“EPC”) for flare and flare gas recovery
system, desulphurisation and denitrification system, zero liquid discharge (ZLD) system, petrochemical engineering and
energy saving system.

Revenue from EPC is recognised as a performance obligation satisfied over time using the output method, i.e. on the basis
of direct measurements of the value to the customer of the goods or services transferred to date relative to the remaining
goods or services promised under the contract. Management has assessed that this output method is an appropriate
measure of the progress towards complete satisfaction of these performance obligations under SFRS(I) 15.

ANNUAL REPORT 2022 97

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

INTANGIBLE ASSETS (cont’d)

LICENSES (cont’d)

Revenue from service concession arrangements

The development of greenfield Green Investments (“GI”) projects is managed in-house by the Group’s own EPC division
and operated under a Build-Operate-Transfer (“BOT”) model. The Group has been granted exclusive concessions of
between 30 to 38.5 years on each project, thus allowing it to be the only centralised supplier of steam, heat and electricity
in certain areas.

Revenue from service concession arrangements under the construction phase is recognised over time using the output
method. Management considers that this output method is an appropriate measure of the progress towards complete
satisfaction of these performance obligations under SFRS(I) 15.

Provision of utilities

The Group provides heat, steam and electricity to industrial customers, which are from diverse industries such as
chemicals, textiles, textile printing and dyeing, food, paper-making, paints, pharmaceuticals, leather, wood processing,
plastic recycling, fodder, chemical fertilisers and rubber.

The amount of revenue recognised is based on the consumption of utilities derived from the meter readings and when
control of the utilities has transferred to its customer, being when the utilities is delivered to the customer’s specific location
(delivery). A receivable is recognised by the Group upon delivery as this represents the point in time at which the right to
consideration becomes unconditional, as only the passage of time is required before payment.

Provision of other services

The Group provides design, consultancy and technology services to the thermal power, construction materials, architecture,
municipal engineering and other industries.

Such services is recognised over time using the output method. Management considers that this output method is an
appropriate measure of the progress towards complete satisfaction of these performance obligations under SFRS(I) 15.

BORROWING COSTS - Borrowing costs directly attributable to the acquisition, construction or production of qualifying
assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

RETIREMENT BENEFIT COSTS - Payments to defined contribution retirement benefit plans are charged as an expense
when employees have rendered the services entitling them to the contributions. Payments made to state-managed
retirement benefit schemes, such as the Singapore Provident Fund and China’s Social Security, are dealt with as payments
to defined contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined
contribution retirement benefit plan.

EMPLOYEE LEAVE ENTITLEMENT - Employee entitlements to annual leave are recognised when they accrue to
employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees
up to the end of the reporting period.

98 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

INTANGIBLE ASSETS (cont’d)

LICENSES (cont’d)

INCOME TAX - The income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement
of profit or loss and other comprehensive income because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are not taxable or tax deductible. The Group’s liability for current
tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the
Company and subsidiaries operate by the end of the reporting period.

A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable
that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the
amount expected to become payable. The assessment is based on the judgement of tax professionals within the Company
supported by previous experience in respect of such activities and in certain cases based on specialist independent tax
advice.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference
arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting profit. In addition, a deferred tax liability is not recognised if the
temporary difference arises from the initial recognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only recognised to the extent that it is probable that there
will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to
reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset
realised based on the tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner
in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and
liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited
or debited outside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also
recognised outside profit or loss (either in other comprehensive income or directly in equity, respectively), or where they
arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken
into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities over cost.

ANNUAL REPORT 2022 99

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

INTANGIBLE ASSETS (cont’d)

LICENSES (cont’d)

FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION - The individual financial statements of each group entity
are measured and presented in the currency of the primary economic environment in which the entity operates (its functional
currency). The consolidated financial statements of the Group and the statement of financial position and statement of
changes in equity of the Company are presented in Chinese Renminbi (“RMB”), which is the functional currency of the
Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional
currency are recorded at the rate of exchange prevailing on the date of the transaction. At the end of each reporting period,
monetary items denominated in foreign currencies are retranslated at the rates prevailing on the end of the reporting period.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing
on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in
profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value
are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in
respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any
exchange component of that gain or loss is also recognised in other comprehensive income.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s non-PRC foreign
operations (including comparatives) are expressed in RMB using exchange rates prevailing on the end of the reporting
period. Income and expense items (including comparatives) are translated at the average exchange rates for the period,
unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the
transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated
in a separate component of equity under the header of foreign currency translation reserve.

CASH AND CASH EQUIVALENTS IN THE STATEMENT OF CASH FLOWS - Cash and cash equivalents in the statement
of cash flows comprise cash at bank and fixed deposits that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.

3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY

In the application of the Group’s accounting policies, which are described in Note 2, management is required to make
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience and other factors that
are considered to be relevant. Actual results may differ from these estimates.

The 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.

100 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY (CONT’D)

3.1 Critical judgements in applying the Group’s accounting policies

There are no critical judgements in applying the Group’s accounting policies, apart from those involving estimations.

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of causing material adjustments to the carrying amounts of assets and liabilities
within the next financial year, are discussed below.

(a) Service concession arrangements

Under SFRS(I) INT 12 Service Concession Arrangements, revenue and cost are recognised during the construction
phase based on the output method; and during the subsequent operating of facilities and supplying of steam
and electricity. Intangible assets arise from cost incurred during the construction phase which are projected to
be recoverable during the operating period. Significant estimates and judgement include the following:

• Projection of total revenue which can be billed to end users during the operating period.

• Evaluation of estimated profit margins for each of the construction and operating phases.

• Allocation of revenue between the construction and service elements of the project.

• Recoverable amount of intangible assets which represent cost recoverable from future operations.

Management has evaluated all aspects of the above estimates and considered that the estimates of intangible
assets and the recognition of revenue and cost from the construction phase to be best estimates; and that the
intangible assets will be recoverable. The revenue from service concession arrangements are disclosed in Note
29 to the financial statements.

(b) Calculation of loss allowance

When measuring ECL, the Group uses reasonable and supportable forward-looking information, which is based
on assumptions for the future movement of different economic drivers and how these drivers will affect each
other.

Loss given default is an estimate of the loss arising on default. It is based on the difference between the
contractual cash flows due and those that the lender would expect to receive, taking into account cash flows
from collateral and integral credit enhancements.

Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the
likelihood of default over a given time horizon, the calculation of which includes historical date, assumptions
and expectations of future conditions.

Based on the most current assessment, management is of the view that the loss allowances made for trade
receivables and other receivables are adequate and the carrying amount of the trade receivables and other
receivables as disclosed in Notes 8 and 9 of the financial statements are recoverable.

ANNUAL REPORT 2022 101

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY (CONT’D)

(c) Recoverable amounts of inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price
in the ordinary course of business, less the estimated costs of selling expenses.

Slow moving or aged inventories are identified by management. This is followed by an assessment of sales or usage
prospects and a comparison of estimated net realisable values with carrying cost. Allowance is made for cost of
inventories which are not expected to be recovered through usage or sales. Physical counts of inventories are carried
out on a periodic basis and any identified defective inventory are written off.

Based on the most current assessment, management is of the view that the allowances made for inventories are
adequate and the carrying amount of the inventories as disclosed in Note 10 to the financial statements is recoverable.

(d) Revenue and costs of construction for long term contracts

Revenue and costs associated with a project are recognised as revenue and expenses respectively by reference
to the progress towards complete satisfaction at the end of the reporting period except where this would not be
representative of the stage of completion. Variations in contract work, claims and incentive payments are included to
the extent that they have been agreed with the customer. When it is probable that the total project costs will exceed
the total project revenue, the expected loss is recognised as an expense immediately. These computations are based
on the presumption that the outcome of a project can be estimated reliably.

Total cost to completion are subject to judgement and estimation by management. Management performed cost
studies, taking into account the costs to date and estimated cost to complete each project. Management also
reviewed the status and the physical proportion of work completed for projects. Based on these procedures,
management is satisfied that estimates of cost to complete projects are realistic, and the estimates of total project
costs compared with expected revenues indicate full project recovery.

(e) Fair value measurement of derivative liabilities

The Group’s convertible bonds comprise a derivative liability component that is measured at fair value for financial
reporting purposes. Management engages a third party qualified valuer to perform the valuation and works closely
with the valuer to determine the appropriate valuation techniques and inputs for the valuation. In estimating the
fair value of the derivative liability component, market-observable data is used to the extent it is available. Where
Level 1 inputs are not available, management establishes inputs that are appropriate to the circumstances. As at
December 31, 2022, the fair value of derivative liability component of the convertible bonds amounted to RMBNil
(2021 : RMB150,655,000) as disclosed in Note 21 to the financial statements.

(f) Impairment of goodwill

As disclosed in Note 18, the recoverable amounts of the cash-generating units which goodwill has been allocated to
are determined based on value in use calculations. The value in use calculations are based on a discounted cash flow
models. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as
well as the expected future cash inflows and the growth rate used for extrapolation purposes. The key assumptions
applied in the determination of the value in use are disclosed in Note 18 to the financial statements.

102 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT

(a) Capital management policies and objectives

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance. Management ensures
that all externally imposed financial covenants are complied with. As at the end of the reporting period, the Group is
in compliance with all financial covenants for external borrowings.

The capital structure of the Group consists of equity, bank borrowings and convertible bonds. Management reviews
the capital structure on an on-going basis. As a part of this review, management considers the cost of capital, the
tenure and the risks associated with each class of capital.

The Group’s overall strategy relating to capital management remains unchanged from prior year.

(b) Categories of financial instruments

The following table sets out the financial instruments as at the end of the reporting period:

GROUP COMPANY

2022 2021 2022 2021

RMB’000 RMB’000 RMB’000 RMB’000

Financial assets

Financial assets at amortised cost 1,434,929 964,977 434,170 426,548

Financial assets at FVTOCI:
Debt instruments classified as at FVTOCI 50,458 3,010 – –
Equity instruments designated as at FVTOCI 2,445 2,683 – –
Total 1,487,832 970,670 434,170 426,548

Financial liabilities
Financial liabilities at amortised cost 5,103,706 4,108,795 1,308,638 1,133,931
Fair value through profit or loss (FVTPL) – 150,655 – 150,655
Lease liabilities 5,830 7,158 – –
Total 5,109,536 4,266,608 1,308,638 1,284,586

ANNUAL REPORT 2022 103

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(c) Financial instruments subject to offsetting, enforceable master netting arrangements and similar agreements

In 2022, the Compnay does not have any financial instruments which are subjected to offsetting under enforceable
master netting arrangements or similar netting agreements.

In 2021, the Company has the following financial instruments which are subjected to offsetting under enforceable
master netting arrangements or similar netting agreements:

Financial assets
(d)
Related amounts not set off
in the statement of financial (e)=
(a) (b) (c) position (c)+ (d)
Gross amount
of recognised Net amounts
financial of financial
liability set asset
off in the presented in
Gross amount statement the statement Cash
Type of financial of recognised of financial of financial Financial collateral
asset financial asset position position instruments received Net amount

2021 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Other receivables
Subsidiaries 1,735,628 (1,349,000) 386,628 – – 386,628

Total 1,735,628 (1,349,000) 386,628 – – 386,628

Financial liabilities
(d)
Related amounts not set off
in the statement of financial (e)=
(a) (b) (c) position (c)+ (d)
Gross amount Net amounts
of recognised of financial
financial asset liability
Gross amount set off in the presented in
of recognised statement the statement Cash
Type of financial financial of financial of financial Financial collateral
liabilitiy liabilitiy position position instruments received Net amount

2021 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Other payables
Subsidiaries 1,705,288 (1,349,000) 356,288 – – 356,288

Total 1,705,288 (1,349,000) 356,288 – – 356,288

The Group does not have any financial instruments which are subjected to offsetting under enforceable master
netting arrangements or similar netting agreements.

104 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(d) Financial risk management policies and objectives

Management of the Group monitors and manages the financial risks relating to the operations of the Group to minimise
the potential adverse effects of such risks on financial performance. These risks include market risk (including foreign
exchange risk and interest rate risk), credit risk and liquidity risk. There has been no change to the Group’s exposure
to these risks and the manner in which it manages and measures the risk.

(i) Foreign exchange risk management

The carrying amounts of monetary assets and liabilities denominated in currencies other than the respective
Group entities’ functional currencies at the reporting date are as follows:

2022 2021

US$ S$ US$ S$

RMB’000 RMB’000 RMB’000 RMB’000

GROUP

Cash and bank balances 5,700 6,500 17,486 26,053

Trade receivables other receivables 4 52 4 19
Trade and other payables – (3,544) (161) (1,981)
Convertible bonds (892,707) – (909,727) –
Total (887,003) 3,008 (892,398) 24,091

COMPANY

Cash and bank balances 4,243 5,807 14,976 24,219

Other receivables 4 – 4 –
Other payables – (3,304) (39) (1,906)
Convertible bonds (892,707) – (909,727) –
Total (888,460) 2,503 (894,786) 22,313

ANNUAL REPORT 2022 105

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(d) Financial risk management policies and objectives (cont’d)

(i) Foreign exchange risk management (cont’d)

Foreign currency sensitivity

The following table details the sensitivity to a 5% change in exchange rate relative to RMB. The sensitivity
analysis includes only outstanding foreign currency denominated monetary items at December 31 and adjusts
their translation at the period end for a 5% change in foreign currency rates.

A strengthening of the following foreign currencies by 5% relative to the RMB will increase (decrease) profits by
the following amounts:

US$ impact S$ impact

2022 2021 2022 2021

RMB’000 RMB’000 RMB’000 RMB’000

GROUP (44,350) (44,620) 150 1,205

COMPANY (44,423) (44,739) 125 1,116

Conversely, a weakening of RMB by 5% relative to the above foreign currencies would have the opposite effect
on profits.

(ii) Interest rate risk management

Interest rate risk is managed by maintaining a mix of fixed and floating rate borrowings. The Group currently
does not have an interest rate hedging policy.  However, management monitors exposures to variability in
interest rates and will consider restructuring the Group’s credit facilities should the need arise.

The Group’s exposures to variability in interest rates are detailed in the liquidity risk management section set
out below.

Interest rate sensitivity

The sensitivity analyses below have been determined based on the exposure to interest rates at the end of
the reporting period. For variable-rate bank borrowings and the Company’s loan to a subsidiary, the analysis
is prepared assuming the amounts outstanding at the end of the reporting period were outstanding for the
whole year.  A 100 basis points increase or decrease is used as it represents management’s assessment of the
possible change in interest rates.

If interest rate had been 100 basis points higher/lower and all other variables were held constant, the Group’s
profit would decrease/increase by RMB10,898,000 (2021 : decrease/increase by RMB5,250,000) respectively.

106 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(d) Financial risk management policies and objectives (cont’d)

(iii) Overview of the Group’s exposure to credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial
loss to the Group. As at December 31, 2022, the Group’s maximum exposure to credit risk without taking into
account any collateral held or other credit enhancements, which will cause a financial loss to the Group due to
failure to discharge an obligation by the counterparties and financial guarantees provided by the Group arises
from the carrying amount of the respective recognised financial assets as stated in the consolidated statement
of financial position.

The Group’s current credit risk grading framework comprises the following categories:

Category Description Basis for recognising ECL

Performing The counterparty has a low risk of 12-month ECL.
default and does not have any past-
due amounts.
Doubtful Amount is >30 days past due or there Lifetime ECL -
has been a significant increase in credit not credit-impaired.
risk since initial recognition.
In default Amount is >180 days past due or there Lifetime ECL -
is evidence indicating the asset is credit-impaired.
credit-impaired.
Write-off There is evidence indicating that the Amount is written off.
debtor is in severe financial difficulty
and the company has no realistic
prospect of recovery.

ANNUAL REPORT 2022 107

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(d) Financial risk management policies and objectives (cont’d)

The table below details the credit quality of the Group’s financial assets and other items, as well as maximum exposure
to credit risk by credit risk rating grades:

12-month or
Internal lifetime ECL/ Gross
credit Incurred loss carrying Loss Net carrying
Note rating basis amount allowance amount

RMB’000 RMB’000 RMB’000

Group

2022

Pledged bank 7 Write-off Write-off 131,823 (3,081) 128,742

deposits

Trade receivables 8 (i) Lifetime ECL 639,774 (1,651) 638,123

(simplified
approach)

Other receivables 9 (ii) Lifetime ECL 87,434 (4,680) 82,754

- Third parties (simplified
approach)

Other receivables 9 Performing 12-month ECL 42 – 42

Notes receivables, at 12 Performing 12-month ECL 50,458 – 50,458

FVTOCI
(9,412)

2021

Pledged bank 7 Write-off Write-off 66,871 (6,081) 60,790

deposits

Trade receivables 8 (i) Lifetime ECL 422,958 (94) 422,864

(simplified
approach)

Other receivables 9 (ii) Lifetime ECL 84,769 (4,754) 80,015

- Third parties (simplified
approach)

Other receivables 9 Performing 12-month ECL 2,909 – 2,909

Notes receivables, at 12 Performing 12-month ECL 3,010 – 3,010

FVTOCI
(7,929)

108 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(d) Financial risk management policies and objectives (cont’d)

12-month or
lifetime ECL/
Internal credit Incurred loss Gross carrying Net carrying
Note rating basis amount Loss allowance amount

RMB’000 RMB’000 RMB’000

COMPANY

2022

Other receivables 9 Performing 12-month ECL 424,029 – 424,029

2021

Other receivables 9 Performing 12-month ECL 386,753 – 386,753

(i) For trade receivables, the Group has applied the simplified approach in SFRS(I) 9 to measure the loss allowance
at lifetime ECL. The Group determines the expected credit losses on these items by using a provision matrix,
estimated from historical credit loss experience based on the past due status of the debtors, adjusted as
appropriate to reflect current conditions and estimates of future economic conditions. Accordingly, the credit
risk profile of these assets is presented based on their past due status in terms of the provision matrix. Note 8
includes further details on the loss allowance for these assets.

(ii) For other receivables – third parties, the Group has applied the simplified approach in SFRS(I) 9 to measure
the loss allowance at lifetime ECL. The Group determines the expected credit losses on these items by using
historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect
current conditions and estimates of future economic conditions. Note 9 includes further details on the loss
allowance for these assets.

Other receivables of the Group and the Company are considered to have low credit risk as they are not due for
payment at the end of the reporting period and there has been no significant increase in the risk of default on
the receivables since initial recognition.

Accordingly, for the purpose of impairment assessment for these receivables, the loss allowance is measured
at an amount equal to 12-month ECL.

ANNUAL REPORT 2022 109

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(d) Financial risk management policies and objectives (cont’d)

(iii) Credit risk management

Upfront deposits are obtained where appropriate and progressive billings made for longer term contracts to
mitigate the risk of financial loss from defaults. Credit exposure is controlled by credit limits that are reviewed
and approved by management. Information on counterparties supplied by independent rating agencies where
available, other publicly available financial information and the Group’s own historical transactions with these
counterparties are used to make decisions relating to credit granted to customers or advances made to
suppliers. The Group’s exposure to credit risk, concentration risk and the credit terms granted to counterparties
are monitored continuously.

The Group’s credit risk primarily relates to the Group’s trade and other receivables, trade prepayments and bank
balances. Trade receivables account for 8% (2021 : 6%) of total assets. For contract related work, collection
of debts including retention sums can involve extended period of time. Management closely monitors overdue
trade debts. The recoverable amount of each individual trade debt is reviewed at the end of each reporting
period. Such review takes into consideration the due date, the period the payment is overdue, the results of
communications with debtors, adherence to installment payment plans or otherwise and current commercial
information of debtors where available. Following the identification of slow payments, the responsible sales
personnel discuss with the relevant customers and report on results of recovery actions and recovery prospects.
Management is of the view that adequate allowance for doubtful debts has been made for irrecoverable amounts.

The five (2021 : five) largest customers accounted for approximately 31.0% (2021 : 20.2%) of the Group’s total
trade receivables as at December 31, 2022.

Other receivables account for 5% (2021 : 6%) of total assets. To minimise risk, trade prepayments are generally
made to suppliers with good credit ratings and with good trading history with the Group. At December 31, 2022
and December 31, 2021, there was no concentration of credit risk with any particular supplier.

Bank balances are placed with reputable banking institutions in the People Repulic of China (“PRC”) and
Singapore.

The maximum exposure to credit risk in the event that the counterparties fail to perform their obligations as at
end of the financial period in relation to each class of recognised financial assets is the carrying amounts of
those assets as stated in the statement of financial position.

Further details of credit risks on trade and other receivables are disclosed in Notes 8 and 9 to the financial
statements respectively.

110 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(d) Financial risk management policies and objectives (cont’d)

(iv) Liquidity risk management

The Group maintains a level of cash and cash equivalents deemed adequate by the management to finance the
Group’s operations and mitigate the effects of fluctuations in cash flows relative to expectations. Management
monitors cash flows, utilisation of bank borrowings and compliance with financial covenants relating to credit
facilities.

The Group has embarked on more service concession arrangements which involve substantial commitment
of funds during the construction of infrastructure with cash inflows only after completion of infrastructure and
delivering of utilities to end users.

Management reviewed the projected timing and amounts of cash inflows and outflows from the service
concession arrangements and is of the view that the funding arrangements made are adequate for its needs
and the Group will be able to discharge its obligations as and when they fall due.

As at the end of the reporting period, the Group’s and Company’s current liabilities exceeded the current
assets by RMB1,037,109,000 and RMB1,019,199,000, respectively. Despite the above condition, the financial
statements of the Group and Company have been prepared on a going concern basis as the Group has access
to committed financing facilities of which RMB342,138,200 were unutilised at the end of reporting period. In
addition, based on the Group’s cash flow forecast for the next 12 months from the date of authorisation of
the financial statement, the Group expects to meet its obligations from operating cash flows and proceeds of
maturing financial assets.

The maturity date of the convertible bonds with carrying value of RMB892,707,000 issued by the Group is
due in April 17, 2023 (Note 21). In the event of redemption by the bondholders, management has the following
sources of funding to settle the amount due:

• Cash generated from operation

• Pledging of the service concession arrangements to secure additional borrowings

As detailed in Note 43, the maturity date of the convertible bonds had been deferred to April 2025.

ANNUAL REPORT 2022 111

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(d) Financial risk management policies and objectives (cont’d)

(iv) Liquidity risk management

Liquidity and interest risk analyses

Financial assets

The following table shows the cash flows (principal and interest where applicable) based on the contractual or
expected maturity of financial assets. The adjustment column represents future interest which are not included
in the carrying amounts of the financial asset in the statement of financial position.

Weighted
average On demand
effective or less than More than 1 Carrying
interest rate 1 year to 5 years Adjustment amount

% RMB’000 RMB’000 RMB’000 RMB’000

GROUP

2022

Non-interest bearing – 773,822 – – 773,822

Variable interest rate 0.25 586,731 – (1,463) 585,268
Fixed interest rate 1.83 131,092 – (2,350) 128,742
Total 1,491,645 – (3,813) 1,487,832

2021

Non-interest bearing – 511,481 – – 511,481

Variable interest rate 0.30 420,269 – (1,257) 419,012
Fixed interest rate 1.47 40,768 – (591) 40,177
Total 972,518 – (1,848) 970,670

COMPANY

2022

Non-interest bearing – 424,029 – – 424,029

Variable interest rate 0.25 10,166 – (25) 10,141
Total 434,195 – (25) 434,170

2021

Non-interest bearing – 386,753 – – 386,753

Variable interest rate 0.30 39,914 – (119) 39,795
Total 426,667 – (119) 426,548

112 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(d) Financial risk management policies and objectives (cont’d)

(iv) Liquidity risk management (cont’d)

Financial liabilities

The following table shows the cash flows of financial liabilities based on the earliest dates on which the Group
and Company are required to pay. The table includes both interest and principal cash flows. The adjustment
column represents future interest which are not included in the carrying amounts of financial liabilities carried
in the statement of financial position.

Weighted
average On demand
effective or less than More than 1 More than Carrying
interest rate 1 year to 5 years 5 years Adjustment amount
% RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

GROUP

2022

Non-interest bearing – 868,024 – – – 868,024

Lease liabilities (fixed
rate) 5.12 1,920 4,459 – (549) 5,830
Variable interest rate 5.39 381,378 923,996 424,274 (276,639) 1,453,009
Fixed interest rate 6.80 1,617,464 1,137,008 407,958 (379,757) 2,782,673
Total 2,868,786 2,065,463 832,232 (656,945) 5,109,536

2021

Non-interest bearing – 763,648 – – – 763,648

Lease liabilities (fixed
rate) 5.12 1,799 6,494 – (1,135) 7,158
Variable interest rate 5.21 288,408 630,015 159,678 (134,082) 944,019
Fixed interest rate 7.46 468,082 2,091,307 518,449 (526,055) 2,551,783
Total 1,521,937 2,727,816 678,127 (661,272) 4,266,608

COMPANY

2022

Non-interest bearing – 415,931 – – – 415,931

Fixed interest rate 8.75 919,229 – – (19,522) 892,707
1,328,160 – – (19,522) 1,308,638

2021

Non-interest bearing - 525,516 – – – 525,516

Fixed interest rate 9.51 20,720 849,562 – (111,212) 759,070
546,236 849,562 – (111,212) 1,284,586

ANNUAL REPORT 2022 113

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(e) Fair value of financial assets and financial liabilities

Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis.

Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting
period. The following table gives information about how the fair values of these financial assets and financial liabilities
are determined (in particular, the valuation technique(s) and inputs used).

Relationship of
Valuation Significant unobservable
Fair value technique and unobservable inputs to fair
Fair value as at hierarchy key input input value
2022 2021

RMB’000 RMB’000

Financial assets 2,445 2,683 Level 3 Discounted Discount rate The higher
at fair value cash flow taking into the discount
through other account the rate, the
comprehensive time value lower the fair
income - of money, value.
unquoted equity inflation
shares and the risk
inherent in
ownership
of the asset
or security
interest being
valued.

Financial assets 50,458 3,010 Level 3 Discounted Discount rate The higher
at fair value cash flow taking into the discount
through other method account the rate, the
comprehensive was used time value of lower the fair
income - notes to capture money. value.
receivables the present
value of the
financial
assets

Financial liabilities - 150,656 Level 2 Option N/A N/A

at fair value Model,
through profit or taking into
loss - convertible consideration
bonds - the various
derivative liability scenarios
component resulting in a
(Note 21) probability-
weighted
average value

114 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT (CONT’D)

(e) Fair value of financial assets and financial liabilities (cont’d)

Fair value of the Group’s financial assets and financial liabilities that are not measured at fair value on a
recurring basis (but fair value disclosures are required)

Management considers that the carrying amounts of financial assets and financial liabilities of the Group and the
Company recorded at amortised cost in the financial statements approximate their fair values as these are either of
relatively short-term maturity or which effective interest rates instruments are close approximation of market interest
rates at period end.

(f) Fair value of guarantees given by the Company

Management considered the nature of the guarantees given by the Company to banks which have provided loans to
a subsidiary (Note 20(a)) and the reliance on assets of other subsidiaries as support for the financial guarantee and
determined that there is no significant fair value of the guarantee to be accounted for by the Company.

5 RELATED PARTY TRANSACTIONS

The ultimate controlling party of the Group is Guo Hong Xin whose interest in the Company is held through his shareholdings
in Allgreat Pacific Limited and Sunpower Business Group Pte. Ltd.

Some of the Group’s transactions and arrangements are with related parties and the effects of these, on the basis
determined between the parties are reflected in these financial statements. The balances are unsecured, receivable or
repayable on demand and interest-free unless stated otherwise.

Related parties comprise entities over which two of the Company’s directors have significant influence or control; and non-
controlling shareholders of partially held subsidiaries (Note 14).

Significant related party transactions:

GROUP

2022 2021

RMB’000 RMB’000

Disposal of M&S Segment – 2,290,000

Rental expenses 2,147 1,276
Purchase of construction services 432,822 416,882
Sale of property, plant and equipment – 253
Sale of services 5,066 4,175
Sale of utilities – 73

The sales and purchases made are conducted on terms mutually agreed among the parties involved. The expenses
charged are paid in accordance with the terms of the agreement entered into among the parties involved.

The nature and terms of transactions with related parties are reviewed by the Board of Directors.

ANNUAL REPORT 2022 115

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

6 CASH AND CASH EQUIVALENTS

GROUP COMPANY

2022 2021 2022 2021

RMB’000 RMB’000 RMB’000 RMB’000

Cash and bank balances 585,268 398,399 10,141 39,795

Cash and bank balances comprise cash held by the Group and the Company and short-term bank deposits with maturity
of three months or less. The average interest rate is 0.25% (2021 : 0.30%) per annum.

7 PLEDGED BANK DEPOSITS

GROUP

2022 2021

RMB’000 RMB’000

Pledged bank deposits 128,742 60,790

The above deposits are pledged to banks to secure the Group’s bank loans. The deposits earn fixed interest rate ranging
from 0.25% to 3.40% (2021 : 0.30% to 2.75%) per annum.

8 TRADE RECEIVABLES

GROUP

2022 2021
RMB’000 RMB’000

(Reclassified)

Outside parties 638,994 416,321

Related parties (Note 5) 780 6,637
Loss allowance (1,651) (94)
Total 638,123 422,864

The credit period for trade receivables is 90 - 180 days (2021 : 90 – 180 days). These receivables are not secured by any
collateral or credit enhancements. No interest is charged on the overdue trade receivables.

Loss allowance for trade receivables has always been measured at an amount equal to lifetime ECL. The ECL on trade
receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis
of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions
of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of
conditions at the reporting date.

There has been no change in the estimation techniques or significant assumptions made during the current reporting
period.

116 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

8 TRADE RECEIVABLES (CONT’D)

A trade receivable is written off when there is information indicating that the debtor is in severe financial difficulty and there
is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy
proceedings. None of the trade receivables that have been written off is subject to enforcement activities.

The following table details the risk profile of trade receivables based on the Group’s provision matrix. As the Group’s
historical credit loss experience does not show significantly different loss patterns for different customer segments, the
provision for loss allowance based on aging profile from invoice dates is not further distinguished between the Group’s
different customer base.

GROUP

7 - 12 1-2 2-3 3-4

< 6 months months years years years >4 years Total

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

2022

Expected credit loss 0% - 1.50% - 12.50% - 50% -

rate 0% 0 % - 5% 12.50% 50% 75% 100%

Estimated total gross

carrying amount at
default 547,658 54,623 17,869 16,219 2,892 513 639,774

Lifetime ECL – – (310) (522) (434) (385) (1,651)

638,123

2021

Expected credit loss 0% - 1.50% - 12.50% - 50% -

rate 0% 0 % - 5% 12.50% 50% 75% 100%

Estimated total gross

carrying amount at
default 400,716 801 16,219 4,483 594 145 422,958

Lifetime ECL – – – – (81) (13) (94)

422,864

ANNUAL REPORT 2022 117

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

8 TRADE RECEIVABLES (CONT’D)

The table below shows the movement in lifetime ECL that has been recognised for trade receivables in accordance with
the simplified approach set out in SFRS(I) 9:

Lifetime ECL credit-impaired

Individually Collectively
assessed assessed Total

GROUP RMB’000 RMB’000 RMB’000

Balance as at January 1, 2021 91,874 20,019 111,893

Transfer of credit-impaired from collective to individual 60 (60) –
Amounts written off (24,168) (139) (24,307)
Amounts recovered (3,651) (6,421) (10,072)
Change in loss allowance due to new trade receivables originated, net
of those derecognised due to settlement 15,326 5,615 20,941
Disposal of subsidiaries (79,347) (19,014) (98,361)
Balance as at December 31, 2021 94 – 94
Change in loss allowance due to new trade receivables originated, net
of those derecognised due to settlement 268 1,383 1,651
Disposal of subsidiaries (94) – (94)
Balance as at December 31, 2022 268 1,383 1,651

The following tables explain how significant changes in the gross carrying amount of the trade receivables contributed to
changes in the loss allowance:

Group Increase (Decrease) in

lifetime ECL

2022 2021

RMB’000 RMB’000

Customers declared bankruptcy – (8,834)

Other unrecoverable amounts – (15,293)
Origination of new trade receivables net of those settled, as well as increase in days
past due up to 90 days (2021 : 90 days) 1,651 20,941

118 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

9 OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

GROUP COMPANY

2022 2021 2022 2021

RMB’000 RMB’000 RMB’000 RMB’000

Advance payments for purchases 76,312 43,404 102 13

Prepayment for BOT projects 44,722 58,956 – –
Deposits and prepayments 13,755 9,097 – –
Third parties 87,434 84,769 – –
Subsidiaries (Note 14) – – 422,054 386,628
Advances to staff 2,042 1,944 – –
Input tax recoverable 174,504 224,378 – –
Others 42 965 1,975 125
Total 398,811 423,513 424,131 386,766
Less:
Loss allowance (4,680) (4,754) – –
Net 394,131 418,759 424,131 386,766

Presentation on statement of financial position:

Current assets 349,409 359,803 294,471 303,106

Non-current assets 44,722 58,956 129,660 83,660
Total 394,131 418,759 424,131 386,766

Included in amounts due from subsidiaries are loans to subsidiaries as follows:

- Loan to a subsidiary amounting to RMB 194,000,000 (2021 : RMB240,000,000). The loan is non-trade in nature,
unsecured, interest-free and is repayable on demand.

- Loan to a subsidiary amounting to RMB 129,660,000 (2021 : RMB83,660,000). The loan is non-trade in nature,
unsecured, interest-free and is repayable on November 30, 2024.

The remaining amount due from subsidiaries are unsecured, interest-free and repayable on demand

Staff advances were non-trade in nature, unsecured, interest-free and repayable on demand.

Loss allowance for other receivables – third parties has always been at an amount equal to lifetime ECL. Other receivables
excluding third parties of the Group and the Company are considered to have low credit risk as they are not due for payment
at the end of the reporting period and there has been no significant increase in the risk of default on the receivables since
initial recognition. Accordingly, for the purpose of impairment assessment for these receivables, the loss allowance is
measured at an amount equal to 12-month ECL. The ECL on other receivables are estimated by reference to past default
experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to
the debtor, general economic conditions of the industry in which the debtor operate and an assessment of both the current
as well as the forecast direction of conditions at the reporting date.

ANNUAL REPORT 2022 119

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

9 OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

There has been no change in the estimation techniques or significant assumptions made during the current reporting
period.

The table below shows the movements in lifetime ECL that has been recognised for other receivables in accordance with
the simplified approach set out in SFRS(I) 9:

Lifetime ECL -
credit-impaired
GROUP RMB’000

Balance as at January 1, 2021 2,884

Amounts written off (900)
Amounts recovered (975)
Change in loss allowance due to new other receivables originated, net of those derecognised due to
settlement 5,248
Disposal of subsidiaries (1,503)
Balance as at December 31, 2021 4,754
Amounts written off (476)
Change in loss allowance due to new other receivables originated, net of those derecognised due to
settlement 402
Balance as at December 31, 2022 4,680

10 INVENTORIES

GROUP
2022 2021
RMB’000 RMB’000

Raw materials and consumables 175,315 122,706

Inventories are stated net of allowance.

GROUP
2022 2021
RMB’000 RMB’000

Movements in allowance for inventories:

At beginning of year 4,463 17,751

Charge to profit or loss – 1,759
Disposal of subsidiaries (2,704) (15,047)
At end of year 1,759 4,463

120 SUNPOWER GROUP LTD.

 11 PROPERTY, PLANT AND EQUIPMENT

Furniture,
Leasehold Plant and fixtures and Motor Construction-
GROUP Buildings improvements machinery equipment vehicles in-progress Total
December 31, 2022

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

ANNUAL REPORT 2022

Cost:
NOTES TO

At January 1, 2021(restated) 564,154 72,254 638,947 51,458 35,033 67,827 1,429,673

Additions(restated) – 1,792 10,886 7,117 2,173 69,973 91,941
Transfers 4,393 – 31,469 190 – (36,052) –
Disposals (24,741) – (109,565) (12,851) (325) – (147,482)
Disposal of subdiaries (248,546) (58,024) (162,306) (34,342) (21,741) (35,798) (560,757)
At December 31, 2021 (restated) 295,260 16,022 409,431 11,572 15,140 65,950 813,375
Additions 892 8,553 10,403 3,219 348 29,225 52,640
Transfers 2,115 – 34,822 – – (36,937) –
Disposals (1,933) – (27,024) (657) (1,820) – (31,434)
Disposal of subdiaries (6,211) – (10,388) (200) – – (16,799)
At December 31, 2022 290,123 24,575 417,244 13,934 13,668 58,238 817,782
FINANCIAL STATEMENTS

Accumulated depreciation:
At January 1, 2021 (restated) 124,766 32,557 214,870 29,355 21,073 – 422,621
Depreciation 12,141 2,523 42,868 2,006 1,751 – 61,289
Disposals 13,856 – (65,977) (2,219) (23) – (54,363)
Disposal of subdiaries (98,243) (34,745) (96,870) (22,778) (17,247) – (269,883)
At December 31, 2021 (restated) 52,520 335 94,891 6,364 5,554 – 159,664
Depreciation 5,613 484 40,358 2,503 1,249 – 50,207
Disposals (653) – (15,394) (641) (1,604) – (18,292)
Disposal of subdiaries (3,554) – (2,502) (180) – – (6,236)
At December 31, 2022 53,926 819 117,353 8,046 5,199 – 185,343

121
 11 PROPERTY, PLANT AND EQUIPMENT (CONT’D)

122
Furniture,
Leasehold Plant and fixtures and Motor Construction-
GROUP Buildings improvements machinery equipment vehicles in-progress Total
December 31, 2022

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Impairment loss:
NOTES TO

At January 1, 2021
December 31, 2021 - - 7,553 11 - - 7,564
Disposal - - (7,553) (11) - - (7,564)
At December 31, 2022 - - - - - - -

Carrying amount:
At December 31, 2022 236,197 23,756 298,891 5,888 8,469 58,238 632,439

At December 31, 2021(restated) 242,740 15,687 306,987 5,197 9,586 65,950 646,147

At the end of the reporting period, buildings and plant and machinery with carrying amount of RMB274,445,000 (2021 : RMB156,859,000) are pledged to secure
banking facilities and loans granted to the Group.
FINANCIAL STATEMENTS

SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

12 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

GROUP
2022 2021
RMB’000 RMB’000

Investments in equity instruments designated as at FVTOCI:

Unquoted equity shares 2,445 2,683
Investments in debt instruments classified as at FVTOCI:
Notes receivables 50,458 3,010
Total financial assets at FVTOCI 52,903 5,693

Presentation on statement of financial position:

Current assets 50,458 3,010
Non-current assets 2,445 2,683
Total 52,903 5,693

Investments in equity instruments

These investments in equity instruments are not held for trading. Instead they are held for medium to long-term strategic
purposes. Accordingly, management has elected to designate these investments in equity instruments as at FVTOCI as
management believes that recognising short-term fluctuations in these investments’ fair value in profit or loss would not be
consistent with the Group’s strategy of holding these investments for long-term purposes and realising their performance
potential in the long run.

In 2021, the equity investments amounting to RMB9,485,000 was disposed as part of disposal of subsidiaries.

Investments in debt instruments

Note receivables represent promissory notes that give the Group the right to receive cash on or before a specific future
date, and such notes are received from customers as settlement of trade receivables. The notes receivables are held by the
Group within a business model whose objective is both to collect their contractual cash flows which are solely payments of
principal and interest on the principal amount outstanding and to sell these financial assets. Hence, the notes receivables
are classified as at FVTOCI.

For purpose of impairment assessment, the notes receivables are considered to have low credit risk as they are held with
financial institutions with sound credit ratings. Accordingly, management believes that there is no loss allowance required.
The Group holds no collateral over these notes. For the purpose of impairment assessment for these debts instruments,
the loss allowance is measured at an amount equal to 12-month ECL.

In determining the ECL, management has taken into account the historical default experience, the financial position of the
counterparties, as well as the future prospects of the industries in which the issuers of these debt instruments obtained
from economic expert reports, financial analysts reports and considering various external sources of actual and forecast
economic information, as appropriate, in estimating the probability of default of each of these financial assets occurring
within their respective loss assessment time horizon, as well as the loss upon default in each case.

There has been no change in the estimation techniques or significant assumptions made during the current reporting
period.

ANNUAL REPORT 2022 123

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

13 RIGHT-OF-USE ASSETS

The Group leases buildings. The average lease term is ranging from 2 to 5 years, where the Group make periodic lease
payments, which are used for its day to day operations.

Land use
GROUP rights Buildings Total
RMB’000 RMB’000 RMB’000

Cost:
At January 1, 2021 383,182 19,101 402,283
Additions – 8,259 8,259
Disposals (39,721) – (39,721)
Disposal of subsidiaries (76,952) (19,101) (96,053)
At December 31, 2021 266,509 8,259 274,768
Additions – 137 137
Disposal of subsidiaries (2,762) – (2,762)
At December 31, 2022 263,747 8,396 272,143

Accumulated depreciation:
At January 1, 2021 37,198 9,285 46,483
Depreciation for the year 6,638 2,497 9,135
Disposals (6,021) - (6,021)
Disposal of subsidiaries (10,861) (10,681) (21,542)
At December 31, 2021 26,954 1,101 28,055
Depreciation for the year 5,447 1,697 7,144
Disposal of subsidiaries (539) – (539)
At December 31, 2022 31,862 2,798 34,660

Carrying amount:
At December 31, 2022 231,885 5,598 237,483

At December 31, 2021 239,555 7,158 246,713

Land use rights relates to upfront payments made to acquire land leases in China.

At the end of the reporting period, land use rights with carrying amount of RMB74,782,000 (2021 : RMB177,248,000) are
pledged to secure banking facilities granted to the subsidiaries.

124 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

14 SUBSIDIARIES

COMPANY
2022 2021
RMB’000 RMB’000

Unquoted equity shares, at cost 606,285 606,285

Financial guarantee contracts 1,850 1,850
Amount due from subsidiaries 306,244 306,244
Total 914,379 914,379

Amount due from subsidiaries is unsecured, interest-free and not expected to be repayable within one year and is
considered to be equity in nature.

Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in
these financial statements.

Effective equity Place of

Cost of interest and voting incorporation/
Subsidiaries investments power held operation Principal activities
2022 2021 2022 2021

RMB’000 RMB’000 % %

Held by Company:

Sunpower International Holding 606,285 606,285 100.0 100.0 Singapore Investment holding.
(Singapore) Pte. Ltd.

Sun Superior Holding Pte. Ltd. * * 100.0 100.0 Singapore Investment holding.

Held by subsidiaries:

Changle Sunpower Clean – – 100.0 100.0 PRC Investment in clean

Energy Co., Ltd. (Shares held energy business
by Sunpower Clean Energy related activities.
Investment (Jiangsu) Co., Ltd.)

Changyi Sunpower Clean – – 100.0 100.0 PRC Investment in clean

Energy Co., Ltd. (Shares held energy business
by Sunpower Clean Energy related activities.
Investment (Jiangsu) Co., Ltd.)

Changshu Suyuan Thermal – – 90.0 90.0 PRC Provision of heat

Power Co., Ltd.(Shares held and electricity to
by Jiangsu Sunpower Clean enterprises.
Energy) Co., Ltd.)

Dingyuan Sunpower Clean – – 100.0 100.0 PRC Provision of heat

Energy Co., Ltd.(Shares held and electricity to
by Sunpower Clean Energy enterprises.
Investment (Jiangsu) Co., Ltd.)

ANNUAL REPORT 2022 125

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

14 SUBSIDIARIES (CONT’D)

Effective equity Place of

Cost of interest and voting incorporation/
Subsidiaries investments power held operation Principal activities

2022 2021 2022 2021

RMB’000 RMB’000 % %

Held by subsidiaries: (cont’d)

Fuzhou Sunpower Jiaoneng – – 70.0 70.0 PRC Heat and electricity

Thermal Power Co.,Ltd. production and
(Shares held by Jiangsu supply
Sunpower Clean Energy Co.,
Ltd.)

Gaoyang Changrun Heat Supply – – 100.0 100.0 PRC Supply of heat and
Co., Ltd. (Shares held by Hebei electricity.
Changrun Environmental Ltd.)

Hebei Changrun Environmental – – 100.0 100.0 PRC Central heating and

Ltd.(Shares held by Jiangsu power generation.
Sunpower Clean Energy Co.,
Ltd.)

Jiangsu Sunpower Electricity – – 100.0 100.0 PRC Provision of electricity

Sales Co., Ltd. (Shares
held by Jiangsu Sunpower
Clean Energy Co., Ltd. and
Zhangjiagang Yongxing
Thermal Power Co., Ltd)

Jiangsu Sunpower Clean – – 100.0 100.0 PRC Investment in clean

Energy Co., Ltd. (Shares held energy business
by Sunpower Clean Energy related activities.
Investment (Jiangsu) Co., Ltd.)

Jiangsu Sunpower Energy-Saving – – – 70.0 PRC Production and sale of

Technology Co., Ltd. (Shares foam glass products.
held by Jiangsu Sunpower
Machinery Manufacture Co.
Ltd.) (1)

Jiangsu Sunpower Machinery – – 100.0 100.0 PRC Manufacture and sale

Manufacture Co., Ltd. (Shares of pressure vessels
held by Sunpower International products.
Holding (Singapore) Pte. Ltd.)

Jiangsu Sunpower Smart Energy – – 100.0 100.0 PRC Thermal production and
Co., Ltd. (Shares held by supply
Sunpower International Holding
(Singapore) Pte. Ltd.)

126 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

14 SUBSIDIARIES (CONT’D)

Effective equity Place of

Cost of interest and voting incorporation/
Subsidiaries investments power held operation Principal activities

2022 2021 2022 2021

RMB’000 RMB’000 % %

Held by subsidiaries: (cont’d)

Jiangsu Sunpower Energy-saving – – 100.0 100.0 PRC Energy-saving and

and Environmental Protection Environmental
Technology Research Institute Protection technology
Co., Ltd. (Shares held by research
Sunpower International Holding
(Singapore) Pte. Ltd.)

Lianshui Sunpower Clean – – 95.0 95.0 PRC Supply of steam, heat

Energy Co., Ltd. (Shares held gas and electricity.
by Sunpower Clean Energy
Investment (Jiangsu) Co., Ltd.
and Jiangsu Sunpower Clean
Energy Co., Ltd.)

Qingdao Xinyuan Thermal – – 85.0 85.0 PRC Supply of steam, heat

Power Co., Ltd.(Shares held and electricity.
by Jiangsu Sunpower Clean
Energy Co., Ltd.)

Qingdao Sunpower Thermal Co., – – 100.0 100.0 PRC Provision of steam to

Ltd. (Shares held by Jiangsu industrial enterprises
Sunpower Clean Energy Co., and sale of electricity.
Ltd.)

Quanjiao Sunpower Clean – – 100.0 100.0 PRC Supply steam/heat gas

Energy Co. Ltd. (Shares held to enterprises.
by Jiangsu Sunpower Clean
Energy Co. Ltd.)

Ruijin Sunpower Clean Energy – – 100.0 100.0 PRC Provision of heat

Co., Ltd. (Shares held by and electricity to
Sunpower Clean Energy enterprises.
Investment (Jiangsu) Co., Ltd.)

Shantou Sunpower Keying – – 51.0 51.0 PRC Supply of steam and

Thermal Co., Ltd. (Shares held electricity.
by Jiangsu Sunpower Clean
Energy Co., Ltd.)

Sino-Sunpower Technology Inc. – – – 100.0 United States Sales, technical

(Shares held by Sunpower of America support and after-
International Holding (“U.S.A”) sale service.
(Singapore) Pte. Ltd.) (2)

ANNUAL REPORT 2022 127

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

14 SUBSIDIARIES (CONT’D)

Effective equity Place of

Cost of interest and voting incorporation/
Subsidiaries investments power held operation Principal activities

2022 2021 2022 2021

RMB’000 RMB’000 % %

Held by subsidiaries: (cont’d)

Sunpower Clean Energy – – 100.0 100.0 PRC Environment and

Investment (Jiangsu) Co., Ltd. new energy related
(Shares held by Sunpower business activities.
International Holding
(Singapore) Pte. Ltd.)

Suzhou Sunpower Smart New – – 100.0 100.0 PRC Provision of steam to

Energy Co., Ltd. (Shares held industrial enterprises
by Jiangsu Sunpower Clean and sale of electricity.
Energy Co., Ltd.)

Tongling Sunpower Clean – – 100.0 100.0 PRC Provision of heat

Energy Co., Ltd. (Shares held and electricity to
by Jiangsu Sunpower Clean enterprises.
Energy) Co., Ltd.)

Wuhu Sunpower Clean Energy – – 100.0 100.0 PRC Provision of heat

Co., Ltd. (Shares held by and electricity to
Jiangsu Sunpower Clean enterprises.
Energy) Co., Ltd.)

Xinjiang Sunpower Clean Energy – – 100.0 100.0 PRC Supply of heat and
Co., Ltd. (Shares held by electricity.
Jiangsu Sunpower Clean
Energy Co., Ltd.)

Xintai Zhengda Thermoelectric – – 86.9 86.9 PRC Provision of steam

Co., Ltd. (Shares held by and heat and sale of
Jiangsu Sunpower Clean electricity.
Energy) Co., Ltd.)

Xuzhou Sunpower Clean Energy – – 100.0 100.0 PRC Provision of heat

Co., Ltd. (Shares held by and electricity to
Sunpower Clean Energy enterprises.
Investment (Jiangsu) Co., Ltd.)

Yihuang Sunpower Clean – – 100.0 100.0 PRC Provision of heat

Energy Co., Ltd. (Shares held and electricity to
by Sunpower Clean Energy enterprises.
Investment (Jiangsu) Co., Ltd.)

128 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

14 SUBSIDIARIES (CONT’D)

Effective equity Place of

Cost of interest and voting incorporation/
Subsidiaries investments power held operation Principal activities

2021 2020 2021 2020

RMB’000 RMB’000 % %

Held by subsidiaries: (cont’d)

Yueyang Sunpower Clean – – 100.0 100.0 PRC Provision of heat

EnergyCo., Ltd. (Shares held and electricity to
by Sunpower Clean Energy enterprises.
Investment (Jiangsu) Co., Ltd.)

Zhangjiagang Yongxing Thermal – – 100.0 100.0 PRC Provision of steam to

Power Co., Ltd. (Shares held industrial enterprises
by Jiangsu Sunpower Clean and sale of electricity.
Energy Co., Ltd.)

Zhoukou Sunpower Clean – – 51.0 51.0 PRC Provision of steam to

Energy Co., Ltd. (Shares held industrial enterprises
by Jiangsu Sunpower Clean and sale of electricity.
Energy Co., Ltd.)

Xuzhou Sunpower Thermal – – 100.0 – PRC Provision of heat

Power Co., Ltd. (3) and electricity to
enterprises.

* Cost of investment amounted to S$1.00 (equivalent to RMB5.07).

(1) Disposed in 2022 (Note 38).
(2) Struck off in 2022.
(3) Newly incorporated in 2022.

The Company and subsidiaries are audited/reviewed by Deloitte Touche Tohmatsu CPA LLP, Nanjing Branch for consolidation
purposes.

The following schedule shows the effects of changes in the Group’s ownership interest in a subsidiary that did not result
in change of control:
GROUP
2022 2021
RMB’000 RMB’000

Non-controlling interest acquired – 13,483

Amount paid on changes in ownership interest in a subsidiary – (1,502)
Exemption of liabilities – 870
Difference recognised in equity (Note 26) – 12,851

The above subsidiary is part of the Manufacturing & services (“M&S”) operations disposed of in 2021 (Note 37).

ANNUAL REPORT 2022 129

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

14 SUBSIDIARIES (CONT’D)

Information about the composition of the Group at the end of the financial year is as follows:

Place of
incorporation
Principal activity and operation Number of subsidiaries
2022 2021

Held by Company:

Investment holding Singapore 2 2

Held by subsidiaries:

Manufacture and sales of pressure vessels products PRC 1 1

Central heating and power generation PRC 1 1

Environment and new energy-related business activities PRC 4 4

Sales, technical support and after sale services U.S.A – 1

Production and sale of foam glass products PRC – 1

Provision of design, consultancy and technology services PRC 1 1

Supply of steam/heat/electricity PRC 23 22

32 33

130 SUNPOWER GROUP LTD.

 14 SUBSIDIARIES (CONT’D)

Details of subsidiaries with material non-controlling interest

The table below shows details of non-wholly owned subsidiaries of the Group with material non-controlling interest: December 31, 2022

ANNUAL REPORT 2022

Proportion of
Place of ownership interests
NOTES TO

incorporation and voting rights held by Profit (Loss) allocated to Accumulated

Name of subsidiaries and operation non-controlling interests non-controlling interests non-controlling interests
2022 2021 2022 2021 2022 2021
% % RMB’000 RMB’000 RMB’000 RMB’000
(restated) (restated)

Nanjing Shengnuo Heat Pipe Co., Ltd PRC – – – 1,044 – –

Shantou Sunpower Keying Thermal Power Co., Ltd PRC 49.0 49.0 54,168 15,732 228,755 174,587

Qingdao Xinyuan Thermal Power Co., Ltd PRC 15.0 15.0 (2,127) 239 34,428 36,555

Shandong Yangguang Engineering

Design Institute Co., Ltd PRC – – – 70 – –
FINANCIAL STATEMENTS

Xintai Zhengda Thermoelectric Co.,Ltd PRC 13.1 13.1 (3,162) (5,020) 21,246 24,435

Changshu Suyuan Thermal Power Co., Ltd PRC 10.0 10.0 (818) (1,337) 32,504 33,325

Individually immaterial subsidiaries with non-controlling

interests (64) (363) 2,592 3,097
47,997 10,365 319,525 271,999

131
 14 SUBSIDIARIES (CONT’D)

132
Summarised financial information in respect of each of the Group’s subsidiaries that has material non-controlling interests is set out below. The summarised financial
information below represents amounts before intragroup eliminations.
December 31, 2022
Shantou Sunpower Qingdao Xinyuan Shandong Yangguang
Nanjing Shengnuo Keying Thermal Power Thermal Engineering Design Institute
Heat Pipe Co Ltd Co., Ltd Power Co., Ltd Co., Ltd
2022 2021 2022 2021 2022 2021 2022 2021
NOTES TO

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

(restated)

Current assets – – 530,576 332,151 199,670 189,484 – –

Non-current assets – – 1,379,870 1,155,915 241,937 231,791 – –

Current liabilities – – (542,054) (225,129) (115,987) (109,972) – –

Non-current liabilities – – (901,549) (906,641) (96,404) (53,527) – –

Equity attributable to owners of the Company – – 238,088 181,709 194,788 221,220 – –

Non-controlling interests – – 228,755 174,587 34,428 36,555 – –

Revenue – 38,028 1,284,264 844,818 183,694 169,815 – 102,993

Expenses – (34,549) (1,173,717) (812,714) (198,726) (168,225) – (104,149)

Profit (Loss) for the year – 3,479 110,547 32,104 (15,032) 1,590 – (1,156)
Other comprehensive income – – – – – 90 – 70
FINANCIAL STATEMENTS

Total comprehensive (loss) income for the year – 3,479 110,547 32,104 (15,032) 1,680 (1,086)

Profit (Loss) attributable to owners of the Company – 2,435 56,379 16,372 (12,905) 1,351 – (1,226)
Profit (Loss) attributable to the non-controlling interests – 1,044 54,168 15,732 (2,127) 239 – 70
Profit(Loss) for the year – 3,479 110,547 32,104 (15,032) 1,590 – (1,156)

Total comprehensive (loss) income attributable to owners

of the Company – 2,435 56,379 16,372 (12,905) 1,427 – (1,040)
Total comprehensive (loss) income attributable to the
non-controlling interests – 1,044 54,168 15,732 (2,127) 253 – (116)
Total comprehensive (loss) income for the year – 3,479 110,547 32,104 (15,032) 1,680 – (1,156)

Dividends paid to non-controlling interests – – – – – (1,500) – (1,526)

Net cash inflow (outflow) from operating activities – 4,956 210,555 151,333 52,472 15,515 – (222,293)

Net cash outflow from investing activities – (4) (139,186) (409,272) (23,720) (16,137) – (68)

Net cash (outflow) inflow from financing activities – (30,623) (17,448) 256,949 51,744 (5,562) – (1,221)

Net cash (outflow) inflow – (25,671) 53,921 (990) 80,496 (6,184) – (223,582)

SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

14 SUBSIDIARIES (CONT’D)

Xintai Zhengda Changshu Suyuan

Thermoelectric Co., Ltd Thermal Power Co., Ltd
2022 2021 2022 2021
RMB’000 RMB’000 RMB’000 RMB’000
(restated)

Current assets 261,061 198,411 76,601 88,230

Non-current assets 784,227 718,519 347,452 354,249

Current liabilities (588,915) (400,212) (117,351) (116,901)

Non-current liabilities (300,783) (362,769) (61,460) (72,160)

Equity attributable to owners of the Company 134,344 129,514 212,738 220,092

Non-controlling interests 21,246 24,435 32,504 33,325

Revenue 367,762 347,088 171,003 169,140

Expenses (391,896) (385,128) (175,882) (182,508)

Loss for the year (24,134) (38,040) (4,879) (13,368)

Other comprehensive (loss) income (179) (176) – 122
Total comprehensive loss for the year (24,313) (38,216) (4,879) (13,246)

Loss attributable to owners of the Company (20,972) (33,020) (4,061) (12,031)

Loss attributable to the non-controlling interests (3,162) (5,020) (818) (1,337)
Loss for the year (24,134) (38,040) (4,879) (13,368)

Total comprehensive loss attributable to owners of

the Company (21,128) (33,173) (4,061) (11,921)
Total comprehensive loss attributable to the
non-controlling interests (3,185) (5,043) (818) (1,325)
Total comprehensive loss for the year (24,313) (38,216) (4,879) (13,246)

Dividends paid to non-controlling interests – – – –

Net cash inflow from operating activities 16,191 40,502 22,616 46,463

Net cash outflow from investing activities (17,263) (200,174) (5,368) (12,042)

Net cash inflow (outflow) from financing activities 776 166,903 (7,786) (33,820)

Net cash (outflow) inflow (296) 7,231 9,462 601

ANNUAL REPORT 2022 133

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

15 ASSOCIATES

GROUP
2022 2021
RMB’000 RMB’000

Unquoted equity shares 48,566 17,090

Share of post-acquisition results 5,321 3,672
53,887 20,762

Details of the associates are as follows:

Principal activities/Place Effective interest and

Name of associate of incorporation and operation voting power held

2022 2021

% %

Jining Mining Industry New energy development and utilisation 49.0 49.0
Sunpower Clean Energy business activities/PRC.
Development Co., Ltd (1)

Suzhou Green Bright Renewable New energy development and utilisation

Energy Co., Ltd. (2) business activities/PRC. 28.0 28.0

(1) Audited by Zhongxi CPAS (Special General Partnership), PRC. Not material for Group’s consolidation purposes.

(2) Not material for Group’s consolidation purpose.

In 2022, the Group injected its share of the additional capital to the associates for a total cash consideration of
RMB31,476,000. There is no change in the effective interest and voting power held by the Group.

The following summarised financial information of Jining Mining Industry Sunpower Clean Energy Development Co.,Ltd. is
presented before intragroup eliminations:

GROUP
2022 2021
RMB’000 RMB’000

Current assets 32,329 8,314

Non-current assets 145,080 63,854
Current liabilities (17,640) (14,069)
Non-current liabilities (81,722) (29,606)
Net assets 78,047 28,493

Group’s share of associates’ net assets 38,243 13,962

134 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

15 ASSOCIATES (CONT’D)

GROUP
2022 2021
RMB’000 RMB’000

Revenue 54,188 42,639

Profit for the year 5,725 3,957

Group’s share of associates’ profit for the year 2,805 1,939

The following summarised financial information of Suzhou Green Bright renewable energy Co., Ltd. presented before
intragroup eliminations:

GROUP
2022 2021
RMB’000 RMB’000

Current assets 16,981 24,286

Non-current assets 72,558 –
Current liabilities (386) –
Non-current liabilities (33,283) –
Net assets 55,870 24,286

Group’s share of associates’ net assets 15,644 6,800

GROUP
2022 2021
RMB’000 RMB’000

Revenue – –

Loss for the year (4,130) –

Group’s share of associates’ loss for the year (1,156) –

ANNUAL REPORT 2022 135

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

16 INTANGIBLE ASSETS

Service
Technical concession
know-how arrangements Trademark Licenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

GROUP

Cost:
At January 1, 2021 5,003 2,464,598 2,924 706,706 3,179,231
Additions (Restated) – 1,023,560 – 71 1,023,631
Disposal of subsidiaries (4,907) – (2,924) (83,461) (91,292)
At December 31, 2021(Restated) 96 3,488,158 – 623,316 4,111,570
Additions – 630,235 – 4,613 634,848
At December 31, 2022 96 4,118,393 – 627,929 4,746,418

Accumulated amortisation:
At January 1, 2021 5,003 127,790 2,924 36,436 172,153
Amortisation for the year (Restated) – 94,915 – 17,800 112,715
Disposal of subsidiaries (4,907) – (2,924) (513) (8,344)
At December 31, 2021 (Restated) 96 222,705 – 53,723 276,524
Amortisation for the year – 129,217 – 17,869 147,086
At December 31, 2022 96 351,922 – 71,592 423,610

Carrying amount:
At December 31, 2022 – 3,766,471 – 556,337 4,322,808

At December 31, 2021 (Restated) – 3,265,453 – 569,593 3,835,046

At the end of the reporting period, service concession arrangements with carrying amount of RMB1,429,110,000 (2021 :
RMB835,005,000) are pledged to secure loans granted to the Group.

The Group entered into service concession agreements with the local government authorities (the “Grantors”), pursuant
to the construction and operation of centralised steam and electricity facilities during the concession period of up to 38.5
years, starting from the commencement date of commercial operation.

Revenue from service concession agreements (Note 29) represents the revenue recognised during the construction stage.
The accounting policies and the significant accounting estimates relating to service concession arrangements are set out
on Notes 2 and 3.2(a) to the financial statements respectively.

136 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

16 INTANGIBLE ASSETS (CONT’D)

Service concession arrangements comprise the following:

Type of service Service

Name of subsidiary as Name of concession concession
operator project Location in PRC Name of grantor agreement period

Quanjiao Sunpower Quanjiao Anhui Quanjiao Administration BOT 30 years

Clean Energy Co., Economic Commission
Ltd.) Development Zone, of Quanjiao
Chuzhou City Economic
Development
Zone

Hebei Changrun Changrun Hebei Gaoyang Administration BOT 30 years

Environmental Ltd. Economic Commission of
Development Zone Hebei Gaoyang
Economic
Development
Zone

Lianshui Sunpower Lianshui Lianshui Economic Administration BOT Not more

Clean Energy Co., Development Zone Commission of than 30
Ltd. Jiangsu Lianshui years from
Economic year 2016
Development
Zone

Shantou Sunpower Shantou Guangdong Shantou Environmental BOT 38.5 years

Keying Thermal Chaonan Zone Protection
Power Co., Ltd. Comprehensive
Management
Center of
Chaonan
District, Shantou
City for Textile
Printing & Dyeing

Xintai Zhengda Xintai Xintai Xinpu District Subdistrict office BOT 30 years
Thermoelectric Co., of Xintai Xinpu
Ltd. District

Xuzhou Sunpower Tongshan Xuzhou Tongshan Government BOT 30 years

Clean Energy Co., District of Xuzhou
Ltd. Tongshan
Disctrict
Xinjiang Sunpower Xinjiang Shanxi Xinjiang Government of Xin BOT 30 years
Clean Energy Co., Ltd Jiang District

ANNUAL REPORT 2022 137

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

17 DEFERRED TAX ASSETS (LIABILITIES)

GROUP

2022 2021

RMB’000 RMB’000

(a) Deferred tax assets

At beginning of year 24,301 38,819

Credit to profit or loss 7,454 9,150
Credit to other comprehensive income for the year 177 234
Arising from disposal of subsidiaries – (23,902)
At end of year 31,932 24,301

138 SUNPOWER GROUP LTD.

 17 DEFERRED TAX ASSETS (LIABILITIES) (CONT’D)

The following are the major deferred tax assets recognised by the Group, and the movements thereon, during the current and prior reporting period:

Fair value Fair value

December 31, 2022

Government change on change on

ANNUAL REPORT 2022

Allowance grant PRC investment investment
Loss for related Tax Accrued withholding in equity in debt BOT
Others Total
NOTES TO

allowance inventories assets loss expenses tax instruments instruments commission

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At January 1, 2021 17,529 2,257 7,145 2,665 1,770 – 377 893 4,147 2,036 38,819
(Charge) Credit to
profit or loss
for the year (3,086) 440 4,321 13,595 63 – – – (4,147) (2,036) 9,150
Credit to other
comprehensive
income for the year – – – – – – 63 171 – – 234
Arising from disposal
of subsidiaries (13,276) (2,257) (1,114) (4,607) (1,833) – (45) (770) – – (23,902)
At December 31, 2021 1,167 440 10,352 11,653 – – 395 294 – – 24,301
FINANCIAL STATEMENTS

Credit (Charge) to
profit or loss for the
year 389 – (297) 7,362 – – – – – – 7,454
Credit to other
comprehensive
income for the year – – – – – – 60 117 – – 177
At December 31, 2022 1,556 440 10,055 19,015 455 411 31,932

139
NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

17 DEFERRED TAX ASSETS (LIABILITIES) (CONT’D)

The tax losses carryforwards from PRC entities will expire after 5 years from the date of tax losses incurred. The deferred
tax amount of tax losses carryforwards that will expire in the next 5 years are as follows:

GROUP

2022 2021

RMB’000 RMB’000

In 1 year 2,542 63
In 2 years – 2,542
In 3 years 60 –
In 4 years 8,988 60
In 5 years 7,362 8,988

GROUP

2022 2021

RMB’000 RMB’000

(b) Deferred tax liabilities

At beginning of year (219,498) (218,692)

Charge to profit or loss (6,168) (2,229)
Arising from disposal of subsidiaries (Note 38) – 1,423
At end of year (225,666) (219,498)

140 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

17 DEFERRED TAX ASSETS (LIABILITIES) (CONT’D)

The following are the major deferred tax liabilities recognised by the Group, and the movements thereon, during the current
and prior reporting period:

Fair value
gain Portion of
on assets construction
acquired margin for Fair value
through BOT project change on
PRC acquisition yet to be investments Accelerated
withholding of subject to in equity tax BOT
tax subsidiaries current tax instruments depreciation commision Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At January 1, 2021 10,187 195,032 8,169 1,423 3,360 521 218,692

(Credit) Charge to profit or
loss for the year (3,328) (1,454) 7,080 – 452 (521) 2,229
Arising from disposal of
subsidiaries (Note 38) – – – (1,423) – – (1,423)
At December 31, 2021 6,859 193,578 15,249 – 3,812 – 219,498
Charge (Credit) to profit
or loss for the year 2,007 (1,592) 2,209 – 3,544 – 6,168
At December 31, 2022 8,866 191,986 17,458 – 7,356 – 225,666

The PRC withholding tax relates to the estimated amount of retained earnings that the Group may remit out of PRC to pay
expenses or dividends. No deferred tax liability is recognised on temporary differences of approximately RMB79,794,000
(2021 : RMB61,731,000) relating to the remaining unremitted earnings of RMB1,595,888,000 (2021 : RMB1,234,620,000)
of overseas subsidiaries as the Group is able to control the timings of the reversal of these temporary differences and it is
probable they will not reverse in the foreseeable future. Temporary difference arising in connection with interest in associate
is insignificant.

18 GOODWILL

Goodwill is allocated to each cash generating units (“CGU”) identified that are expected to benefit from the business
combination. The carrying amounts of goodwill of each CGU are as follows:

GROUP

2022 2021

RMB’000 RMB’000

Hebei Changrun Environmental Ltd. 5,483 5,483

Qingdao Xinyuan Thermal Power Co., Ltd. 20,423 20,423
Zhangjiagang Yongxing Thermal Power Co., Ltd 309,863 309,863
Changshu Suyuan Thermal Power Co., Ltd 79,813 79,813
415,582 415,582

ANNUAL REPORT 2022 141

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

18 GOODWILL (CONT’D)

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of the cash generating units, are determined from value-in-use calculations. The key assumptions
for the value-in-use calculations are those regarding the discount rates and expected order book and direct costs during
the period. Management estimates discount rates using post-tax rates that reflect current market assessments of the time
value of money and the risks specific to the cash generating units. Expected order book and direct costs are based on past
practices and expectations of future changes in the market.

The Group prepares cash flow forecasts derived from the most recent financial forecasts approved by management for the
next five years using an average discount rate ranging from 9.5% to 11% (2021 : 9% to 12.95%) and terminal growth rate
ranging from Nil% to 2% (2021 : Nil% to 2%) per annum.

Sensitivity analysis

Management estimates that any reasonable changes in the estimates and assumptions used in the discontinued cash flow
model would not change the conclusion on the goodwill impairment assessment as the recoverable amount is still higher
than the carrying amount of goodwill.

19 TRADE PAYABLES, OTHER PAYABLES AND CONTRACT LIABILITIES

GROUP COMPANY

2022 2021 2022 2021

RMB’000 RMB’000 RMB’000 RMB’000

Trade:
Outside parties 353,611 197,407 – –
Related parties (Note 5) 258,014 200,004 – –
Notes payables 179,187 124,952 – –
Contract liabilities 49,096 65,351 – –

Non-trade:
Related parties (Note 5) 19,939 34,731 - -
Outside parties 74,064 60,769 22,056 18,572
Accruals and other liabilities 28,816 27,036 – –
Consideration payable for acquisition of subsidiaries 7,183 – –
Accruals for payroll 45,053 39,202 15,173 14,943
Value-added taxes and other tax liabilities 7,497 11,752 – –
Government grants received yet to be applied
pending satisfaction of conditions 129,546 80,984 – –
Subsidiaries (Note 5) – – 393,875 356,288
Total 1,144,823 849,371 431,104 389,803

142 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

19 TRADE PAYABLES, OTHER PAYABLES AND CONTRACT LIABILITIES (CONT’D)

The average credit period for purchases of goods and services is 180 days (2021 : 180 days).

Contract liabilities relating to construction contracts are balances due to customers under construction contracts. These
arise when a particular milestone payment exceeds the revenue recognised to date. In addition, advance payments from
customers for utilities are also included in contract liabilities.

The non-trade amounts due to subsidiaries and related parties are unsecured, interest-free and repayable on demand.

Government grants were received mainly in relation to the Group’s environmental protection initiatives in combating
pollution. The deferred income will be recognised in profit or loss over the period ranging from 3 to 5 years, depending on
the fulfilment condition of the grant.

20 BORROWINGS

GROUP

2022 2021

RMB’000 RMB’000

Bank loans 3,342,975 2,736,732

Presentation in statement of financial position:

Current liabilities payable within one year 918,485 594,006
Non-current liabilities 2,424,490 2,142,726
Total 3,342,975 2,736,732

The bank loans are:

GROUP

2022 2021

RMB’000 RMB’000

Secured by building and land use rights of the subsidiary

and guaranteed by the Company 378,262 656,119
Secured by building and land use rights of the subsidiary
and guaranteed by other subsidiaries 566,043 418,000
Secured by service concession arrangement of the subsidiary
and guaranteed by other subsidiaries 1,656,823 1,059,837
Secured by pledged bank deposit and guaranteed by other subsidiaries 179,000 –
Secured by service concession arrangement of the subsidiary – 12,500
Guaranteed by another subsidiary 288,000 268,500
Guaranteed by the Company – 321,776
Guaranteed by the Company and another subsidiary 274,847 –
Total 3,342,975 2,736,732
The bank loans bear effective interest rate of 3.50% - 7.82% (2021 : 3.96% - 7.90%) per annum.

ANNUAL REPORT 2022 143

 20 BORROWINGS (CONT’D)

144
RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing December 31, 2022
activities are those for which cash flows were, or future cash flows will be, classified in the Group’s consolidated statement of cash flows as cash flows from financing
activities.
NOTES TO

Non-cash changes
Fair value Foreign
January 1, Financing changes exchange Other December 31,
2022 cash flows (ii) (Note 21) (i) movement (i) changes (iii) 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Borrowings (Note 20) 2,736,732 606,243 – – – 3,342,975

Convertible bonds (Note 21) 909,727 (14,761) (150,656) 72,695 75,702 892,707
Lease liabilities (Note 22) 7,158 (1,465) – – 137 5,830
3,653,617 590,017 (150,656) 72,695 75,839 4,241,512

Non-cash changes
Fair value Foreign
FINANCIAL STATEMENTS

January 1, Financing changes exchange Other Disposal of December 31,

2021 cash flows (ii) (Note 21) (i) movement changes (iii) subsidiaries 2021
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Borrowings (Note 20) 2,549,515 689,217 – – – (502,000) 2,736,732

Convertible bonds (Note 21) 1,326,284 – (486,212) (17,702) 87,357 – 909,727
Lease liabilities (Note 22) 7,984 (1,888) – – 8,259 (7,197) 7,158
3,883,783 687,329 (486,212) (17,702) 95,616 (509,197) 3,653,617

(i) The fair value changes are related to derivative liability component of convertible bonds recognised at fair value. The fair value change on Tranche 1 convertible bonds issed on Mar 3, 2017(“CB1”) amounting
to US$110 million and Tranche 2 convertible bonds issued on October 15, 2018 (“CB2”) amounting to US$20 million are RMB138,048,000 and RMB12,608,000, respectively during the year (2021 :
RMB430,329,000 and RMB55,883,000, respectively). Foreign exchange movement is related to depreciation (appreciation) of RMB against US$, for convertible bonds denominated in US$ (Note 21).

(ii) The cash flows make up the net amount of proceeds from borrowings and repayments of borrowings in the consolidated statement of cash flows. In 2021, the repayments of borrowings includding repayment
to amount due to related party amounting to RMB119,000,000, which was utilised for Tongshan Project located in Xuzhou City, Jiangsu Province.

SUNPOWER GROUP LTD.

(iii) Other changes include interest accruals and payments and new lease liabilities.
NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

21 CONVERTIBLE BONDS

GROUP AND COMPANY

2022 2021

RMB’000 RMB’000

Debt host liability component, at amortised cost 892,707 759,072

Derivative liability component, at fair value 150,655
Total 892,707 909,727

On March 3, 2017, the Company issued convertible bonds (“CB1”) amounting to US$110 million and these are convertible
into new shares at an initial conversion price of S$0.50 per share.

In 2018, the Company obtained shareholders’ approval in respect of an aggregate principal amount of up to US$70 million
Tranche 2 convertible bond (“CB2”) with an initial conversion price of S$0.60 per share, together with warrants exercisable
at an aggregate amount of US$30 million.

On October 15, 2018, the Company issued US$20 million of CB2. As at December 31, 2020 and December 31, 2021, a
principal amount of US$50 million CB2 have yet to be issued.

Both CB1 and CB2 will otherwise bear interest of 2.5% per annum until the maturity date. The Group is required to achieve
performance targets calculated based on its audited adjusted profit after taxation and minority interest (“Adjusted PATMI”)
(excluding fair value gain and losses of the CB and non-recurring income from the sale of assets and businesses and other
mutually agreed accounting adjustments) (“Performance Targets”), otherwise adjustments will be made to the conversion
price accordingly.

On December 30, 2020, the Company entered into an addendum agreement to defer the maturity date of CB1 and CB2
to March 3, 2023 as well as to revise the Performance Targets to encompass the change in business structure after
the disposal of the M&S Segment (Note 37). The terms to the addendum agreement were effective on June 18, 2021
upon certain conditions, of which, were contingent upon the successful disposal of the M&S Segment. The disposal was
approved by the shareholders on April 16, 2021.

Pursuant to the disposal of the M&S Segment (Note 37), a proposed special dividend approved by the shareholders on
April 16, 2021 was also made to both the shareholders and bondholders. RMB403,315,000 (Note 32) was paid to the
bondholders during the year ended December 31, 2021.

In 2022, the maturity date of CB1 and CB2 which was initially on March 3, 2023, is elected by the bondholders to be the
15th Business Day after the date on which the Group’s audited financial statements the financial year ended December 31,
2022 are issued.

ANNUAL REPORT 2022 145

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

21 CONVERTIBLE BONDS (CONT’D)

The net proceeds received from the issue of the bonds have been split between the liability element and derivative
component, representing the fair value of the embedded option to convert the liability into derivative of the Group, as
follows:
GROUP AND COMPANY
2022 2021
RMB’000 RMB’000

CB1

Nominal value of CB issued 757,856 757,856

Less: Transaction costs (26,342) (26,342)
Net value of CB issued 731,514 731,514
Foreign exchange gain 15,622 (45,836)
Cumulative interest accrued (Note 32) 512,727 447,993
Fair value (gain) loss on CB (404,025) (265,977)
Total 855,838 867,694
Less: Interest payables included in accruals (Note 19) (19,424) (16,470)
Less: Interest paid to bondholders (82,357) (72,814)
Debt host and derivative liability component at end of year 754,057 778,410

The interest accrued is calculated by applying an effective interest rate of 8.85% (2021 : 10.0%) per annum to the liability
component.

GROUP AND COMPANY

2022 2021
RMB’000 RMB’000

CB2

Nominal value of CB issued 138,285 138,285

Less: Transaction costs (15,000) (15,000)
Net value of CB issued 123,285 123,285
Foreign exchange gain 1,978 (9,259)
Cumulative interest accrued (Note 27) 65,388 54,420
Fair value (gain) loss on CB (38,872) (26,264)
Total 151,779 142,182
Less: Interest payables included in accruals (Note 19) (3,393) (2,864)
Less: Interest paid to bondholders (9,736) (8,001)
Debt host and derivative liability component at end of year 138,650 131,317

The interest accrued is calculated by applying an effective interest rate of 8.19% (2021 : 9.41%) per annum to the liability
component.

Management estimates that the carrying amount of the liability component of CB1 and CB2 as at December 31, 2022 and
2021 approximates its fair value.

146 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

22 LEASE LIABILITIES

GROUP
2022 2021
RMB’000 RMB’000

Maturity analysis:

Year 1 1,914 1,914

Year 2 1,914 1,914
Year 3 1,914 1,914
Year 4 637 1,914
Year 5 – 637
6,379 8,293
Less: Future interest payments (549) (1,135)
5,830 7,158

Analysed as:
Current 1,646 1,652
Non-Current 4,184 5,506
5,830 7,158

The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within
the Group’s treasury function.

23 SHARE CAPITAL

GROUP AND COMPANY

2022 2021 2022 2021
Number of ordinary shares of US$0.01 each
’000 ’000 US$’000 US$’000

Authorised share capital:

At beginning of the year and end of the year 2,300,000 2,300,000 23,000 23,000

Number of ordinary shares

’000 ’000 RMB’000 RMB’000

Issued and fully paid up:

At the beginning of the year 795,686 791,848 57,662 57,251
Treasury shares re-issued – – – 161
Exercise of share options (Note 27) – 3,838 – 250
At end of the year 795,686 795,686 57,662 57,662

Fully paid ordinary shares carry one vote per share and a right to dividends as and when declared by the Company.

ANNUAL REPORT 2022 147

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

24 TREASURY SHARES

GROUP AND COMPANY

2022 2021

RMB’000 RMB’000

At the beginning of the year – 4,690

Treasury shares re-issued – (4,690)
At the end of the year – –

In 2019, the Company acquired 2,542,000 of its own shares through purchases on the Singapore Exchange during the year.
The total amount paid to acquire the shares was RMB4,690,000 and has been deducted from shareholders’ equity. The
shares are held as treasury shares. The Company intends to reissue these shares to executives who exercise their share
options under the employee share option plan. In 2021, the treasury shares were issued to employees upon exercise of
the share options.

25 SHARE PREMIUM

GROUP AND COMPANY

2022 2021

RMB’000 RMB’000

At the beginning of the year 313,653 309,061

Treasury shares re-issued – (330)
Transfer from share option reserve arising from exercise of share options – 4,922
At the end of the year 313,653 313,653

148 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

26 GENERAL RESERVES

GROUP

2022 2021
RMB’000 RMB’000

(restated)

Capital reserve:
At the beginning of the year 14,867 2,016
Effects of acquiring part of non-controlling interests in a subsidiary (Note 14) – 12,851
At the end of the year 14,867 14,867

Statutory surplus reserve fund:

At the beginning of the year 167,188 289,864
Transfer during the year from retained earnings 53,528 41,070
Disposal of subsidiaries – (163,746)
At the end of the year 220,716 167,188

Enterprise expansion fund:

At the beginning and at the end of the year 4,098 4,098
Total 239,681 186,153

Capital reserves represents effects of changes in ownership interests in a subsidiary when there is no change in control
(Note 14).

Companies in PRC are required by regulation to appropriate 10% of annual PRC accounting profit to the reserve fund until
the reserve reaches 50% of the registered capital. The statutory surplus reserve fund may be used to make up prior year
losses incurred and, with approval from relevant government authority, to increase capital. The reserve is not available for
distribution as dividends to shareholders.

Appropriation from the PRC accounting profit to the enterprise expansion fund is at the discretion of the Company at rates
determined by the Company. The enterprise expansion fund, subject to approval by relevant government authority, may
also be used to increase capital.

ANNUAL REPORT 2022 149

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

27 SHARE OPTION RESERVE

GROUP AND COMPANY

2022 2021
Number of Number of
share options Exercise price share options Exercise price
(’000) RMB (’000) RMB

Outstanding at the beginning of the year 1,191 1.27 5,029 0.70

Exercised during the year – – (3,838) 0.53
Outstanding at the end of the year 1,191 1,191

A total of 59,220,000 shares options were granted on May 19, 2015 under the Sunpower Employee Share Option Scheme
2015 (“2015 ESOS”) which was approved by shareholders on April 29, 2015. Group Employees, Executive Directors, Non-
Executive Directors, Controlling Shareholders and their Associates (all as defined in 2015 ESOS) can participate in the 2015
ESOS.

Subject to the absolute discretion of the Remuneration Committee, Controlling Shareholders and their Associates (as
defined in the circular to the shareholders dated April 6, 2015) are eligible to participate in the 2015 ESOS, provided that
the participation of each Controlling Shareholder or his Associate and each grant of an option to any of them may only
be effected with the specific prior approval of independent shareholders in a general meeting by a separate resolution as
provided for in the circular to shareholders.

The aggregated options outstanding were 1,191,000, of which 1,000,000 with exercise price S$0.308 (approximately
RMB1.596) and 191,000 with exercise price S$0.116 (approximately RMB0.601) and all exercisable up to May 19, 2025.
These share options are exercisable at any time 2 years after the date of grant. Any unexercised options will expire 10 years
from date of grant. Options are forfeited if the grantee leaves the Group before the options vest.

Of the 59,220,000 share options granted, 5,922,000 share options were granted to Mr. Guo Hong Xin, Executive Director
of the Company; 8,968,000 share options were granted to Mr. Ma Ming, Executive Director of the Company; and the
remaining 44,330,000 share options were granted to Group Employees.

The estimated fair value of options granted to Mr. Guo and Mr. Ma was S$0.052 (equivalent to RMB0.24) and the estimated
fair value of options granted to Group Employees was S$0.0604 (equivalent to RMB0.28).

These fair values were calculated using the Binomial model with inputs as follow:
Mr. Guo Group
and Mr. Ma Employees

Weighted average share price (RMB) 0.67 0.67

Weighted average exercise price (RMB) 0.53 0.53
Expected volatility 38.89% 44.44%
Expected life 3 years 5 years
Risk free rate 0.98% 1.56%
Expected dividend yield 0.68% 0.68%

Expected volatility for options granted to Mr. Guo, Mr. Ma; and to Group Employees were determined by calculating the
historical volatility of the Company’s share price over the past 3 and 5 years prior to the date of grant of May 19, 2015
respectively.

150 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

28 REVALUATION RESERVE

The investments revaluation reserve represents the cumulative gains and losses arising on the revaluation of:

(i) investments in equity instruments designated as at FVTOCI, and

(ii) investments in debt instruments classified as at FVTOCI.

Movements in investments revaluation reserve

GROUP
2022 2021
RMB’000 RMB’000

Balance at beginning of year (1,209) 363

Fair value gain on investments in equity instruments designated as at FVTOCI (497) (164)
Fair value loss on investments in debt instruments classified as at FVTOCI – (574)
Disposal of subsidiaries – (834)
Balance at end of year (1,706) (1,209)

29 REVENUE

The Group derives its revenue from the transfer of goods and services over time and at a point in time in the following major
product lines. This is consistent with the revenue information that is disclosed for each reportable segment under SFRS(I)
8 (see Note 42).

A disaggregation of the Group’s revenue for the year, for both continuing and discontinued operations, is as follows:

GROUP
2022 2021
RMB’000 RMB’000
(restated)

Segment revenue

Continuing operations:
Sales of goods 74,509 –
Revenue from service concession arrangements 567,778 855,024
Provision of utilities 2,806,319 1,997,256
Provision of other services – 77,254
3,448,606 2,929,534
Discontinued operations:
Sales of goods – 250,493
Construction contracts – 153,307
Revenue from service concession arrangements – 144,921
Provision of other services – 7,812
– 556,533

Total 3,448,606 3,486,067

ANNUAL REPORT 2022 151

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

29 REVENUE (CONT’D)

GROUP

2022 2021
RMB’000 RMB’000

(restated)

Timing of revenue recognition

At a point of time:
Sales of goods 74,509 250,493
Provision of utilities 2,806,319 1,997,256
2,880,828 2,247,749
Over time:
Construction contracts – 153,307
Provision of other services – 85,066
Revenue from service concession arrangements 567,778 999,945
3,448,606 3,486,067

The following table shows the aggregate amount of the transaction price allocated to performance obligations unsatisfied
(or partially unsatisfied) as at the end of the reporting period.

GROUP

2022 2021

RMB’000 RMB’000

Revenue from service concession arrangements 65,480 241,925

Management expects that 100% of the transaction price allocated to the unsatisfied contracts as of December 31, 2022
will be recognised as revenue during the next reporting period amounting to RMB65,480,000.

152 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

30 OTHER OPERATING INCOME

GROUP
2022 2021
RMB’000 RMB’000

Continuing operations:
Government grants 9,464 7,181
Interest income 3,377 3,641
Reversal of impairment loss on trade and other receivables subject to ECL – 705
Reversal of impairment loss on pledged bank deposits 3,000 –
Gain on disposal of property, plant and equipment 51 68,383
Gain on disposal of right of use asset – 4,343
Government rebates 541 1,924
Exchange gain on convertible bonds – 17,702
Gain on debt forgiveness – 23,972
Gain on usage of emission right – 8,630
Gain on quality indemnity and others 4,683 5,379
Others 1,299 1,295
22,415 143,155

Discontinued operation:
Government grants – 2,136
Interest income – 1,341
Reversal of impairment loss on trade and other receivables subject to ECL – 10,343
Government rebates – 208
Others – 957
– 14,985

Total 22,415 158,140

ANNUAL REPORT 2022 153

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

31 OTHER OPERATING EXPENSES

GROUP
2022 2021
RMB’000 RMB’000

Continuing operations:
Exchange loss on convertible bonds 72,276 -
Impairment loss on trade and other receivables subject to ECL 2,053 20,360
Impairment loss on pledged bank deposits - 3,081
Impairment loss on inventory - 1,759
Loss on disposal of property, plant and equipment 6,087 282
Penalty and compensation - 3,037
Loss on usage of emission right 146 10,883
Others 1,226 3,410
Subtotal 81,788 42,812

Discontinued operation:
Impairment loss on trade and other receivables subject to ECL - 5,826
Loss on disposal of property, plant and equipment - 390
Others - 689
Subtotal - 6,905

Total 81,788 49,717

32 FINANCE COSTS

GROUP
2022 2021
RMB’000 RMB’000

Continuing operations:
Interest expense on bank loans 156,336 126,726
Interest expense on convertible bonds (Note 21) 75,702 108,395
Special dividend paid to bondholders (Note 21) - 403,315
Interest expense on lease liabilities 450 176
Subtotal 232,488 638,612

Discontinued operation:
Interest expense on bank loans - 8,015
Interest expense on lease liabilities - 109
Subtotal - 8,124

Total 232,488 646,736

154 SUNPOWER GROUP LTD.

 33 PROFIT BEFORE INCOME TAX

(a) This has been arrived at after charging (crediting):

GROUP December 31, 2022

Continuing operations Discontinued operations Total

ANNUAL REPORT 2022

2022 2021 2022 2021 2022 2021
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Restated) (Restated) (Restated)
NOTES TO

Amortisation of intangible assets * 147,086 112,602 - 113 147,086 112,715

Depreciation of right of use assets 7,144 7,084 - 2,051 7,144 9,135
Depreciation of property, plant and equipment 50,207 50,580 - 10,709 50,207 61,289
Total depreciation and amortisation 204,437 170,266 - 12,873 204,437 183,139
Capitalised in intangible assets (802) (6,146) - - (802) (6,146)
203,635 164,120 - 12,873 203,635 176,993
Audit fees:
- to auditors of the Company 1,104 977 - - 1,104 977
- to other auditors 4,242 3,069 - - 4,242 3,069
Non-audit fees:
- to auditors of the Company 31 24 - - 31 24
- to other auditors 195 1,095 - - 195 1,095
Cost of inventories sold included in cost of sales 1,912,773 1,295,725 - 365,842 1,912,773 1,661,567
Defined contribution plans 19,796 16,973 - 5,826 19,796 22,799
FINANCIAL STATEMENTS

Directors’ fees - Directors of the Company 1,800 1,200 - - 1,800 1,200

Directors’ remuneration - Directors of the Company 12,708 14,701 - 750 12,708 15,451
Foreign exchange loss (gain) on convertible bonds 72,695 (17,702) - - 72,695 (17,702)
Net loss (gain) on disposal of property, plant and
equipment 6,036 (68,101) - 390 6,036 (67,711)
(Gain) on disposal of right-of-use asset - (4,343) - - - (4,343)
(Gain) on disposal of subsidiaries (12,820) (934,334) - - (12,820) (934,334)
Impairment loss on inventories, net - 1,759 - - - 1,759
Research and development expenses 29,354 36,429 - 19,358 29,354 55,787
Salaries and wages 145,575 142,102 - 90,436 145,575 232,538
(Reversal of) Impairment loss on pledged bank deposits (3,000) 3,081 - - (3,000) 3,081
Impairment loss on financial assets:
- Impairment loss on trade and other receivables subject
to ECL* 2,053 20,360 - 5,829 2,053 26,189
- (Reversal of) impairment loss on trade and other
receivables subject to ECL - (705) - (10,342) - (11,047)

155
* included in other operating expenses.
NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

33 PROFIT BEFORE INCOME TAX (CONT’D)

(b) Compensation of key management personnel

The remuneration of directors and other members of key management during the financial year were as follows:

GROUP

Continuing operations Discontinued operations Total

2022 2021 2022 2021 2022 2021

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Short-term benefits 16,549 19,823 – 750 16,549 20,573

Other staff benefits 97 99 – 34 97 133
Total 16,646 19,922 – 784 16,646 20,706

The remuneration of directors and key executives is determined by the Remuneration Committee having regard to the
performance of individuals and market trends.

34 INCOME TAX EXPENSE

Income tax recognised in profit or loss:

GROUP

Continuing operations Discontinued operations Total

2022 2021 2022 2021 2022 2021

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Tax expense comprises:

Current tax expense 47,584 248,153 – 6,417 47,584 254,570
Deferred tax (Note 17) (1,286) (6,239) – (682) (1,286) (6,921)
Total tax expense 46,298 241,914 – 5,735 46,298 247,649

156 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

34 INCOME TAX EXPENSE (CONT’D)

The income tax expense varied from the amount of income tax expense determined by applying the PRC income tax rate
of 25% (2021 : 25%) to profit before income tax as a result of the following differences:

GROUP
Continuing operations Discontinued operations Total
2022 2021 2022 2021 2022 2021
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Profit before income tax 233,094 1,040,919 - 33,294 233,094 1,074,213

Income tax expense calculated at

PRC income tax rate of 25% 58,274 260,230 - 8,323 58,274 268,553
Tax effect of non-deductible items 2,376 7,180 - 1,851 2,376 9,031
Effect of different tax rates of
entities operating in other
jurisdictions (3,587) 94,964 - - (3,587) 94,964
Effect of tax exemption and tax
incentives (9,065) (327,237) - (4,111) (9,065) (331,348)
Tax effect of disposal of subsidiaries - 207,728 - - - 207,728
Tax effect of income not taxable for
tax purpose (412) (485) - - (412) (485)
Temporary differences previously
not recognised (1,288) (466) (328) (1,288) (794)
Income tax expense 46,298 241,914 - 5,735 46,298 247,649

(a) Jiangsu Sunpower Technology Co., Ltd. and Nanjing Shengnuo Heat Pipe Co., Ltd

The above subsidiaries are foreign investment enterprises located in Nanjing, Jiangsu Province, PRC, where the
statutory tax rate is 25%. In 2009, Jiangsu Sunpower Technology Co., Ltd., Nanjing Shengnuo Heat Pipe Co.,Ltd.
received official approval for a preferential tax rate of 15%, initially for three years and subsequently renewed, with
the latest renewal for three years commencing from 2020. The above subsidiaries were disposed of during 2021
(Note 38).

(b) Jiangsu Sunpower Pressure Vessels Equipment Manufacturing Co., Ltd. and Jiangsu Sunpower Pipe-line Engineering
Technology Co., Ltd.

The above subsidiaries are foreign investment enterprises located in Nanjing, Jiangsu Province, PRC, where the
statutory tax rate is 25%. In 2015, they received official approval for a preferential tax rate of 15%, initially for three
years beginning 2018, under the “New and High Tech Enterprises” scheme, which was renewed for a further three
years commencing 2021. The above subsidiaries were disposed of during 2021 (Note 38).

(c) Shantou Sunpower Keying Thermal Power Co., Ltd.

The above subsidiary is foreign investment enterprises located in Shantou, Guangzhou Province, PRC, where the
statutory tax rate is 25%. In 2019, Shantou Sunpower Keying Thermal Power Co., Ltd. received official approval for
a preferential tax rate of 15%, for three years beginning 2019, under the “Pollution prevention” scheme, which was
renewed for a further 2 years to December 31, 2023. In 2022, the preferential tax rate of 15% was renewed for a
further 1 year to December 31, 2024

ANNUAL REPORT 2022 157

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

35 EARNINGS PER SHARE

GROUP
2022 2021
RMB’000 RMB’000
(restated)

From continuing and discontinued operations

Earnings:
Profit attributable to equity holders of the Company 138,799 816,199
Financial effect of convertible bonds (2,259) (395,518)
136,540 420,681

Number of shares:
Weighted average number of ordinary shares for the purposes
of basic earnings per share (’000) 795,686 793,886
Effect of dilutive potential ordinary shares from share options
and convertible bonds (’000) 678,973 358,691
Weighted average number of ordinary shares for the purposes
of diluted earnings per share (’000) 1,474,659 1,152,577

Basic earnings per share (RMB cents) 17.44 102.81

Diluted earnings per share (RMB cents) 9.26 36.50

GROUP
2022 2021
RMB’000 RMB’000
(restated)

From continuing operations

Earnings:
Profit attributable to equity holders of the Company 138,799 816,199
Less: Profit for the year from discontinued operations (26,439)
Financial effect of convertible bonds (2,259) (395,518)
136,540 394,242

Number of shares:
Weighted average number of ordinary shares for the purposes
of basic earnings per share (’000) 795,686 793,886
Effect of dilutive potential ordinary shares from share options
and convertible bonds (’000) 678,973 358,691
Weighted average number of ordinary shares for the purposes
of diluted earnings per share (’000) 1,474,659 1,152,577

Basic earnings per share (RMB cents) 17.44 99.48

Diluted earnings per share (RMB cents) 9.26 34.21

158 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

35 EARNINGS PER SHARE (CONT’D)

The denominators used are the same as those detailed above for both basic and diluted share earnings per share from
continuing and discontinued operations.

From discontinued operations

Basic earnings per share for the discontinued operation is RMBNil cents (2021 : RMB3.33 cents) per share and diluted
earnings per share for the discontinued operations is RMBNil cents (2021 : RMB2.29 cents) cents per share, based on the
profit for the year from discontinued operations of RMBNil (2021 : RMB26,439,000) and the denominators detailed above
for both basic and diluted earnings per share.

36 DIVIDENDS

There was no dividend declared or paid in 2022.

In 2021:

(a) a first and final tax exempt dividend of S$0.003 per ordinary share totalling S$2,387,058 (equivalent to RMB11,464,000)
was paid to shareholders in respect of the financial year ended December 31, 2020;

(b) a one-tier tax-exempt dividend of S$0.2412 per ordinary share totalling S$192,618,155 (equivalent to RMB925,145,000)
was paid to shareholders in connection with the disposal of subsidiaries (Note 38).

37 DISCONTINUED OPERATIONS

On December 31, 2020, Sunpower International Holding (Singapore) Pte. Ltd., a wholly-owned subsidiary of the Company,
entered into a sales and purchase agreement (the “SPA”) with Nanjing Sunpower Holdings Co., Ltd., a special purpose
vehicle whose shareholders are Mr. Guo Hong Xin, the

Executive Chairman of the Company (“Mr. Guo”) and Mr. Ma Ming, the Executive Director of the Company (“Mr. Ma”), to
sell the entire issued and paid-up share capital (the “Sale Shares”) of Sunpower Technology (Jiangsu) Co., Ltd., an indirect
wholly-owned subsidiary of the Company. By disposing of the Sale Shares, the Group will dispose of the entire M&S
segment of the Group as a going concern, and the Group’s remaining core business will be the GI Business.

The disposal was completed on April 30, 2021, on which date control of the aforementioned subsidiaries passed to the
acquirer. Details of the assets and liabilities disposed of, and the calculation of the profit or loss on disposal, are disclosed
in Note 38.

ANNUAL REPORT 2022 159

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

37 DISCONTINUED OPERATIONS (CONT’D)

The results of the discontinued operations, which have been included in the proft for the year, were as follows:

GROUP

2021

RMB’000

Revenue 556,533
Cost of sales (430,440)
Other operating income 14,985
Selling and distribution expenses (17,260)
Administrative expenses (75,495)
Other operating expenses (6,905)
Finance costs (8,124)
Profit before income tax 33,294
Income tax expense (5,735)
Profit for the year from discontinued operations 27,559

Profit for the year from discontinued operations attributable to:

Equity holders of the Company 26,439
Non-controlling interests 1,120
Profit for the year 27,559

In 2021, the disposed subsidiaries contributed RMB201,637,000 to the Group’s net operating cash flows, paid
RMB102,291,000 in respect of investing activities and contributed RMB173,400,000 in respect of financing activities.

160 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

38 DISPOSAL OF SUBSIDIARIES

On October 27, 2022, the Group disposed its interet in the subsidiary Jiangsu Sunpower Energy-Saving Technology Co.,
Ltd.(“Sunpower Energy-Saving”).

The net assets of Sunpower Energy-Saving at the date of disposal were as follows:

Total
RMB’000

Current assets
Cash and cash equivalents 29
Other receivables, deposits and prepayments 272
Total current assets 301
Non-current assets
Property, plant and equipment 3,709
Right-of-use assets 2,223
Total non-current assets 5,932
Current liabilities
Trade payables 1,117
Advances from customers 50
Other payables 15,447
Total current liabilities 16,614

Net liabilities derecognised 10,381

Total
RMB’000

Consideration received:
Cash consideration received during the year 600
Cash consideration receivable 1,400

Gain on disposal
Cash consideration received during the year 600
Cash consideration receivable 1,400
Net assets derecognised 10,381
Non-controlling interest derecognised 439
12,820

Net gain on disposal of subsidiaries 12,820

ANNUAL REPORT 2022 161

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

38 DISPOSAL OF SUBSIDIARIES (CONT’D)

Net cash inflow arising on disposal

Total
RMB’000

Cash consideration received 600

Less: Cash and cash equivalents disposed of (29)
571

As referred to in Note 37, on April 30, 2021, the Group discontinued its M&S operations at the time of the disposal of its
interest in subsidiaries Nanjing Shengnuo Heat Pipe Co.,Ltd., Jiangsu Sunpower Technology Co.,Ltd., Jiangsu Sunpower
Pressure Vessels Equipment Manufacturing Co., Ltd., Jiangsu Sunpower Pipe-Line Engineering Technology Co.,Ltd.,
Shandong Yangguang Engineering Design Institute Co.,Ltd., Jiangsu Sunpower Combustion Technology Co.,Ltd., Jiangsu
Fuyou Industry Co.,Ltd. and Sunpower Technology (Jiangsu) Co.,Ltd..

The net assets of the disposed subsidiaries at the date of disposal were as follows:

Total
RMB’000

Current assets
Cash and cash equivalents 627,132
Pledged bank deposits 159,225
Trade receivables and contract assets 1,592,994
Other receivables, deposits and prepayments 262,528
Inventories 845,522
Financial assets at fair value through other comprehensive income 373,163
Total current assets 3,860,564
Non-current assets
Property, plant and equipment 290,874
Right-of-use assets 74,511
Other receivables, deposits and prepayments 66,652
Financial assets at fair value through other comprehensive income 9,485
Intangible assets 82,948
Deferred tax assets 23,902
Total non-current assets 548,372
Current liabilities
Trade payables 745,423
Advances from customers 1,221,779
Other payables 530,762
Lease liabilities 3,453
Borrowings 269,000
Total current liabilities 2,770,417
Non-current liabilities
Deferred tax liabilities 1,423
Borrowings 233,000
Lease liabilities 3,744
Total non-current liabilities 238,167

Net assets derecognised 1,400,352

162 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

38 DISPOSAL OF SUBSIDIARIES (CONT’D)

Total
RMB’000

Consideration received:
Cash 2,290,000

Gain on disposal
Consideration received 2,290,000
Net assets derecognised (1,400,352)
Non-controlling interest derecognised 44,686
934,334
Expenses on disposal of subsidiaries:
- incurred in 2021 (41,075)
- incurred in 2020 (10,995)
(52,070)

Net gain on disposal of subsidiaries 882,264

Net cash inflow arising on disposal

Total
RMB’000

Cash consideration received 2,290,000

Less: Witholding tax (207,728)
Less: Expenses on disposal of subsidiaries (52,070)
Less: Cash and cash equivalents disposed of (627,132)
1,403,070

The impact of the disposal of the subsidiaries on the Group’s results and cash flows in the current period is disclosed in
Note 37.

39 OPERATING LEASE ARRANGEMENTS

The Group as lessee

At December 31, 2022, the Group is committed to RMB33,000 (2021 : RMB1,774,000) for short-term leases or small value
assets.

ANNUAL REPORT 2022 163

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

40 CAPITAL COMMITMENTS

GROUP

2022 2021

RMB’000 RMB’000

For acquisition of intangible assets 65,480 578,509

41 CONTINGENT LIABILITIES

The Group and the Company has contingent liabilities arising from guarantees given for bank loans as disclosed in Note 20.

42 SEGMENT INFORMATION

The Group determines its operating segments based on components of the Group’s business which are reviewed by the
chief operating decision maker in order to allocate resources to the segments and to assess their performance.

The Group has the following business segments with the segmental analysis used to allocate resources and to assess
performance:

(1) Manufacturing & services (“M&S”) - this segment included highly efficient heat exchangers and pressure vessels, heat
pipes and heat pipe exchangers, pipeline energy saving products and related environmental protection products. This
segment also provided solutions for flare and flare gas recovery system, desulphurisation and denitrification system,
zero liquid discharge system, petrochemical engineering and energy saving system. The M&S segment was disposed
of during the year (Note 37).

(2) Green investments (“GI”) - this segment focus on the investment, development and operation of centralised heat,
steam and electricity generation plants.

The accounting policies of the operating segments are the same as the Group’s accounting policies described in Note 2
to the financial statements. Segment results represent the profits earned by each segment without allocation of central
administration costs, director’s remuneration, interest income, foreign exchange gains and losses, income tax and finance
costs at corporate level.

Inter-segment transfers:  Segment revenue and expenses include transfers between business segments. Inter-segment
sales are charged at prevailing market prices.  These transfers are eliminated on consolidation.

164 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

42 SEGMENT INFORMATION (CONT’D)

Segment information about the Group’s operating segments are presented below.

M&S GI Total
RMB’000 RMB’000 RMB’000

2022

REVENUE - 3,448,606 3,448,606

RESULT
Segment result - 375,942 375,942
Gain on disposal of subsidiaries (Note 38) - 12,820 12,820
Financial effects of convertible bonds (Note A) - (2,259) (2,259)
Interest expense - (156,786) (156,786)
Interest income - 3,377 3,377
Profit before income tax 233,094
Income tax expense (46,298)
Profit for the year for continuing operations 186,796

ANNUAL REPORT 2022 165

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

42 SEGMENT INFORMATION (CONT’D)

M&S GI Total
RMB’000 RMB’000 RMB’000
2021 (Restated) (Restated)

Continuing operations:

REVENUE - 2,929,534 2,929,534

RESULT
Segment result - 294,037 294,037
Unallocated corporate expenses - - (15,319)
Gain on disposal of subsidiaries (Note 38) - - 934,334
Expenses on disposal of subsidiaries (Note 38) - - (41,075)
Financial effects of convertible bonds (Note A) - 395,517 395,517
Dividend to convertible bond holders - - (403,315)
Interest expense - (126,901) (126,901)
Interest income - 3,641 3,641
Profit before income tax 1,040,919
Income tax expense (241,914)
Profit for the year for continuing operations 799,005

Discontinued operation:

REVENUE 556,533 - 556,533

RESULT
Segment result 40,077 - 40,077
Interest expense (8,124) - (8,124)
Interest income 1,341 - 1,341
Profit before income tax 33,294
Income tax expense (5,735)
Profit for the year for discontinued operation 27,559

Consolidated revenue for the year (continuing and discontinued

operations) 3,486,067
Consolidated profit for the year (continuing and discontinued
operations) 826,564

Note A

Financial effects of convertible bonds consists of unrealised foreign exchange difference, interest and fair value effect on
convertible bonds (Note 21).

166 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

42 SEGMENT INFORMATION (CONT’D)

Segment assets represent property, plant and equipment, land use rights, intangible assets, financial assets at fair value
through other comprehensive income, deferred tax assets, inventories, trade receivables, other receivables, deposits and
prepayments, pledged bank deposits and bank balances and cash, which are attributable to each operating segments.
Segment liabilities represent trade and other payables, tax payables, bank borrowings, amount due to customers for
contract work and deferred tax liabilities, which are attributable to each operating segments.

Unallocated corporate assets mainly represent bank balances and cash, other receivables, deposits and prepayments at
corporate level.

Unallocated corporate liabilities represent other payables at corporate level.

Statement of Net Assets M&S GI Total

RMB’000 RMB’000 RMB’000

December 31, 2022

Assets:
Segment assets - 7,652,258 7,652,258
Unallocated assets 16,355
Total assets 7,668,613

Liabilities:
Segment liabilities - 4,649,022 4,649,022
Unallocated liabilities 969,742
Total liabilities 5,618,764

December 31, 2021

Assets:
Segment assets (Restated) - 6,558,096 6,558,096
Unallocated assets 59,666
Total assets (Restated) 6,617,762

Liabilities:
Segment liabilities - 3,782,129 3,782,129
Unallocated liabilities 971,802
Total liabilities 4,753,931

ANNUAL REPORT 2022 167

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

42 SEGMENT INFORMATION (CONT’D)

OTHER INFORMATION M&S GI Total

RMB’000 RMB’000 RMB’000

2022

Capital expenditure
- Property, plant and equipment - 52,640 52,640
- Intangible assets - 634,848 634,848
Depreciation expense of property, plant and equipment - 50,207 50,207
Depreciation expense of right-of-use assets - 7,144 7,144
Impairment losses, net of reversal, on trade and other receivables
subject to ECL - 2,053 2,053
Impairment allowance on inventories, net of reversals - - -
Amortisation of intangible assets - 147,086 147,086

M&S GI Total
RMB’000 RMB’000 RMB’000
2021 (Restated) (Restated)

Continuing operations:

Capital expenditure
- Property, plant and equipment - 89,449 89,449
- Intangible assets - 1,023,560 1,023,560
Depreciation expense of property, plant and equipment - 50,580 50,580
Depreciation expense of right-of-use assets - 7,084 7,084
Impairment losses, net of reversal, on trade and other receivables
subject to ECL - 19,655 19,655
Impairment allowance on inventories, net of reversals - 1,759 1,759
Amortisation of intangible assets - 112,602 112,602

Discontinuing operation:

Capital expenditure
- Property, plant and equipment 2,492 - 2,492
- Intangible assets 71 - 71
Depreciation expense of property, plant and equipment 10,709 - 10,709
Depreciation expense of right-of-use assets 2,051 - 2,051
Impairment losses, net of reversal, on trade and other receivables
subject to ECL (4,513) - (4,513)
Impairment allowance on equity instruments
Amortisation of intangible assets 113 - 113

168 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

42 SEGMENT INFORMATION (CONT’D)

Geographical information

The geographical locations of the customers of the Group principally comprise the PRC, Canada, U.S.A, India, South East
Asia, Middle East, Europe, South America, and Oceania.

The Group’s revenue from external customers and information about its segment assets (non-current assets excluding
investments in associate, financial assets at fair value through other comprehensive income, deferred tax assets,
commitment fee and “other” financial assets) by geographical location are detailed below:

Revenue from
external customer Non-current assets

2022 2021 2022 2021

RMB’000 RMB’000 RMB’000 RMB’000

restated

PRC 3,448,606 3,443,330 5,741,062 5,243,203

Asia – 8,881 – –
North America – 2,142 – –
Europe – 31,714 – –
Total 3,448,606 3,486,067 5,741,062 5,243,203

Information about major customers

There is no single customer which contributes 10% or more of the revenue in 2022 and 2021, respectively.

43 EVENTS AFTER THE REPORTING PERIOD

On March 24, 2023, the Company entered into an amendment agreement to defer the maturity date of CB1 and CB2 to
the later of :

• April 3, 2025 (the “Initial Maturity Date”), and

• if so elected by the Bondholders (at their sole discretion) by written notice to the Group delivered not less than 10
Business Days before the Initial Maturity Date, the date that is the 15th Business Day after the date on which the
Group’s audited financial statements for financial year ending 2024 are issued.

The redemption yield to maturity, being the total internal rate of return that the bondholders shall achieve upon redemption
on maturity will be revised from 8% to 10% over the investment period.

ANNUAL REPORT 2022 169

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

44 PRIOR YEAR ADJUSTMENTS AND COMPARATIVE FIGURES

Certain restatements have been made to the prior year’s financial statements to enhance comparability with the current year’s
financial statements following the Group’s adoption of the amendments to SFRS(I) 1-16 Property, Plant and Equipment:
Proceeds before Intended Use that became effective during the year and applied retrospectively. The amendments prohibit
deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced before
that asset is available for use, i.e. proceeds while bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management. Consequently, the Group recognises such sales proceeds
and related costs in profit or loss. The Group measures the cost of those items in accordance with SFRS(I) 1-2 Inventories.
The amendments also clarify the meaning of ‘testing whether an asset is functioning properly’. SFRS(I) 1-16 now specifies
this as assessing whether the technical and physical performance of the asset is such that it is capable of being used in the
production or supply of goods or services, for rental to others, or for administrative purposes. If not presented separately
in the statement of comprehensive income, the financial statements shall disclose the amounts of proceeds and cost
included in profit or loss that relate to items produced that are not an output of the Group’s ordinary activities, and which
line item(s) in the statement of comprehensive income include(s) such proceeds and cost. The amendments are applied
retrospectively, but only to items of property, plant and equipment that are brought to the location and condition necessary
for them to be capable of operating in the manner intended by management on or after the beginning of the earliest period
presented in the financial statements in which the Group first applies the amendments.

The Group shall recognise the cumulative effect of initially applying the amendments as an adjustment to the opening
balance of retained earnings (or other component of equity, as appropriate) at the beginning of that earliest period presented.
The retrospective application has no material effect on the statement of financial position at the beginning of the preceding
period.

The effect of the restatements to the Group’s financial statements are as follows:

January 1, 2021
As previously
Statement of financial position stated Adjustments Restated
RMB’000 RMB’000 RMB’000

Equity
Retained earnings 1,011,993 20,351 1,032,344
Non-controlling interests 313,318 9,476 322,794

December 31, 2021

As previously
Statement of financial position stated Adjustments Restated
RMB’000 RMB’000 RMB’000

Non-current assets
Property, plant and equipment 647,163 (1,016) 646,147
Intangible assets 3,820,994 14,052 3,835,046

Equity
General reserves 187,724 (1,571) 186,153
Retained earnings 1,028,665 6,779 1,035,444
Non-controlling interests 264,171 7,828 271,999

170 SUNPOWER GROUP LTD.

NOTES TO
FINANCIAL STATEMENTS
December 31, 2022

44 PRIOR YEAR ADJUSTMENTS AND COMPARATIVE FIGURES (CONT’D)

Year ended December 31, 2021

As previously
stated Adjustments Restated
RMB’000 RMB’000 RMB’000

Consolidated statement of profit or loss and other

comprehensive income

Revenue 2,902,319 27,215 2,929,534

Cost of sales (2,557,549) (44,006) (2,601,555)

Consoildated statement of cash flows

Operating activities
Profit before income tax 1,091,004 (16,791) 1,074,213
Adjustments for:
Depreciation of property, plant and equipment 61,080 (53) 61,027
Amortisation of intangible assets 107,465 920 108,385

Investing activities
Purchase of property, plant and equipment (92,563) (923) (93,486)
Acquisition of intangible assets (870,537) 16,847 (853,690)

ANNUAL REPORT 2022 171

STATISTICS OF SHAREHOLDINGS
As at 8 March 2023

DISTRIBUTION OF SHAREHOLDINGS

NO. OF NO. OF
SIZE OF SHAREHOLDINGS SHAREHOLDERS % SHARES %

1 - 99 1 0.03 49 0.00
100 - 1,000 141 4.85 103,951 0.01
1,001 - 10,000 1,263 43.45 8,671,000 1.09
10,001 - 1,000,000 1,475 50.74 77,885,917 9.79
1,000,001 AND ABOVE 27 0.93 709,025,225 89.11

TOTAL 2,907 100.00 795,686,142 100.00

TWENTY LARGEST SHAREHOLDERS

NO. OF
NO. NAME SHARES %

1 HSBC (SINGAPORE) NOMINEES PTE LTD 223,628,120 28.11

2 UNITED OVERSEAS BANK NOMINEES (PRIVATE) LIMITED 136,831,700 17.20
3 CITIBANK NOMINEES SINGAPORE PTE LTD 74,618,804 9.38
4 OCBC SECURITIES PRIVATE LIMITED 71,071,601 8.93
5 DBS NOMINEES (PRIVATE) LIMITED 57,372,100 7.21
6 MAYBANK SECURITIES PTE. LTD. 38,405,700 4.83
7 DB NOMINEES (SINGAPORE) PTE LTD 30,000,000 3.77
8 UOB KAY HIAN PRIVATE LIMITED 19,892,100 2.50
9 PHILLIP SECURITIES PTE LTD 12,599,900 1.58
10 RAFFLES NOMINEES (PTE.) LIMITED 6,848,892 0.86
11 LI FENG 5,120,000 0.64
12 IFAST FINANCIAL PTE. LTD. 3,684,108 0.46
13 TAN KAH BOH ROBERT@ TAN KAH BOO 3,300,000 0.41
14 HONG LEONG FINANCE NOMINEES PTE LTD 3,241,900 0.41
15 CGS-CIMB SECURITIES (SINGAPORE) PTE. LTD. 2,805,300 0.35
16 WATERWORTH PTE LTD 2,600,000 0.33
17 HENG WAH CHONG (WANG HEZONG) 2,000,000 0.25
18 TIGER BROKERS (SINGAPORE) PTE. LTD. 1,928,100 0.24
19 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 1,745,100 0.22
20 CHEN YAN FENG 1,700,000 0.21

TOTAL 699,393,425 87.89

172 SUNPOWER GROUP LTD.

STATISTICS OF SHAREHOLDINGS
As at 8 March 2023

SHARE CAPITAL

Authorised share capital : US$23,000,000

Issued and fully paid-up : US$7,956,861.42
Class of Shares : Ordinary shares of US$0.01 each
Number of Treasury Shares held : Nil
Number of subsidiary holdings held : Nil
Voting rights : One vote per share

Shareholdings Held in Hands of Public

Based on information available to the Company as at 8 March 2023, 40.1% of the issued ordinary shares of the Company is held
by the public and therefore Rule 723 of the Listing Manual is complied with.

SUBSTANTIAL SHAREHOLDERS AS AT 8 MARCH 2023

(According to Register of Substantial Shareholders)

Name of Substantial Shareholder Direct Interest % Deemed Interest %

1. Guo Hong Xin(1) - - 153,638,554 19.31

2. Ma Ming (2)
- - 137,509,737 17.28
3. Allgreat Pacific Limited (3)
82,209,983 10.33 71,428,571 8.98
4. Claremont Consultancy Limited (4)
66,081,166 8.30 71,428,571 8.98
5. Sunpower Business Group Pte. Ltd. 71,428,571 8.98 - -
6. Tournan Trading Pte. Ltd. 71,428,571 8.98 - -
7. Lin Yucheng 100,000,000 12.67 - -
8. Joyfield Group Limited 66,154,120 8.38 - -
9. Pan Shuhong (5)
19,393,198 2.46 66,154,120 8.38

Notes:

(1) Mr Guo Hong Xin is (i) deemed to be interested in the 82,209,983 shares held by Allgreat Pacific Limited which is an investment holding company wholly
owned by him, and (ii) deemed to be interested in the 71,428,571 shares held by Sunpower Business Group Pte. Ltd., which is an investment holding company
wholly owned by Allgreat Pacific Limited, which is in turn wholly owned by him.

(2) Mr Ma Ming is (i) deemed to be interested in the 66,081,166 shares held by Claremont Consultancy Limited which is an investment holding company wholly
owned by him, and (ii) deemed to be interested in the 71,428,571 shares held by Tournan Trading Pte. Ltd., which is an investment holding company wholly
owned by Claremont Consultancy Limited, which is in turn wholly owned by him.

(3) Sunpower Business Group Pte. Ltd., is wholly owned subsidiary of Allgreat Pacific Limited. Accordingly, Allgreat Pacific Limited is deemed to be interested in
the 71,428,571 shares held by Sunpower Business Group Pte. Ltd.

(4) Tournan Trading Pte. Ltd., is wholly owned subsidiary of Claremont Consultancy Limited. Accordingly, Claremont Consultancy Limited is deemed to be
interested in the 71,428,571 shares held by Tournan Trading Pte. Ltd.

(5) Ms Pan Shuhong is deemed to be interested in the 66,154,120 shares held by Joyfield Group Limited which is wholly owned by her.

ANNUAL REPORT 2022 173

NOTICE OF ANNUAL
GENERAL MEETING
NOTICE IS HEREBY GIVEN that the 2023 Annual General Meeting of the Company will be held on Friday, 28 April 2023 at the
Company’s Board Room, No. 2111 Chengxin Avenue, High-tech Industrial Park, Jiangning District, Nanjing, Jiangsu, 211112,
People’s Republic of China, and will be broadcast “live” to shareholders via an audio and video feed as well as an audio only link
(the details of which are set out in the notes below), at 10.00 a.m., for the purpose of transacting the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the Audited Financial Statements for the financial year ended 31 December Resolution 1
2022 together with the Directors’ Statement and the Auditors’ Report thereon.

2. To declare a 1-tier tax exempt final dividend of S$0.0013 Singapore cents per share in respect of the Resolution 2
financial year ended 31 December 2022.

3. To approve Directors’ fees of S$741,203 for the financial year ended 31 December 2022. (2021: S$623,920) Resolution 3

4. To re-elect Mr Ma Ming, a Director retiring pursuant to Bye-Law 104 of the Bye-Laws of the Company and Resolution 4
who, being eligible, offer himself for re-election. (See Explanatory Note)

5. To re-elect Mr Lau Ping Sum Pearce, a Director retiring pursuant to Bye-Law 104 of the Bye-Laws of the Resolution 5
Company and who, being eligible, offer himself for re-election. (See Explanatory Note)

6. To re-elect Mr Li Lei, a Director retiring pursuant to Bye-Law 104 of the Bye-Laws of the Company and Resolution 6
who, being eligible, offer himself for re-election. (See Explanatory Note)

7. To re-appoint Messrs Deloitte & Touche LLP as Auditors and to authorise the Directors to fix their Resolution 7
remuneration.

SPECIAL BUSINESS

To consider and, if thought fit, to pass, with or without modifications, the following Ordinary Resolutions:-

8. That pursuant to Bye-Law 12(B) of the Bye-Laws of the Company and listing rules of Singapore Exchange Resolution 8
Securities Trading Limited (“SGX-ST”), the Directors be and are hereby authorised to:

(a) (i) issue shares in the capital of the Company (“shares”) whether by way of rights, bonus or
otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would
require shares to be issued, including but not limited to the creation and issue of (as well as
adjustments to) warrants, debentures or other instruments convertible into shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the
Directors may, in their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue
shares in pursuance of any Instrument made or granted by the Directors while this Resolution was
in force,

174 SUNPOWER GROUP LTD.

NOTICE OF ANNUAL
GENERAL MEETING
PROVIDED THAT:

(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be
issued in pursuance of Instruments made or granted pursuant to this Resolution) shall not exceed
fifty per cent. (50%) of the total number of issued shares (excluding treasury shares and subsidiary
holdings (if any)) in the capital of the Company (as calculated in accordance with sub-paragraph
(2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to
existing shareholders of the Company (including shares to be issued in pursuant of Instruments
made or granted pursuant to this Resolution) shall not exceed twenty per cent. (20%) of the total
number of issued shares (excluding treasury shares and subsidiary holdings (if any)) in the capital of
the Company (as calculated in accordance with sub-paragraph (2) below);

(2) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of
determining the aggregate number of shares that may be issued under paragraphs (1) above, the
percentage of issued shares shall be based on the total number of issued shares in the capital of the
Company excluding treasury shares if any at the time this Resolution is passed, after adjusting for:

(i) new shares arising from the conversion or exercise of any convertible securities or share
options or vesting of share awards which were issued and are outstanding or subsisting at the
time this Resolution is passed; and

(ii) any subsequent bonus issue or consolidation or subdivision of shares;

and, in sub-paragraph (1) above and this sub-paragraph (2), “subsidiary holdings” has the meaning
given to it in the Listing Manual of the SGX-ST;

(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions
of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been
waived by the SGX-ST) and the Bye-Laws for the time being of the Company; and

(4) (unless revoked or varied by the Company in General Meeting) the authority conferred by this
Resolution shall continue in force until the conclusion of the next Annual General Meeting of the
Company or the date by which the next Annual General Meeting of the Company is required by
the Bye-Laws to be held, whichever is the earlier. (See Explanatory Note)

9. That approval be and is hereby given to the Board of Directors of the Company to allot and issue from time Resolution 9
to time such number of shares as may be required to be issued pursuant to the exercise of the options
under the Sunpower Employee Share Option Scheme 2015 (“ESOS”),

PROVIDED THAT the aggregate nominal amount of shares over which the Remuneration Committee may
grant options on any date, when added to the nominal amount of shares issued and issuable in respect
of all options granted under the ESOS shall not exceed 15 percent of the issued share capital of the
Company on the day immediately preceding the date of the relevant grant. (See Explanatory Note)

ANNUAL REPORT 2022 175

NOTICE OF ANNUAL
GENERAL MEETING
OTHER BUSINESS

10. To transact any other business that may be properly transacted at the Annual General Meeting of the
Company.

BY ORDER OF THE BOARD

HO WUI MEE MARIAN

Company Secretary

5 April 2023

Explanatory Notes:

Resolution 4

Mr Ma Ming, Executive Director and Chief Executive Officer, will continue to serve in these capacities if re-elected as a Director
of the Company.

Detailed information on Mr Ma (including information as set out in Appendix 7.4.1. of the Listing Manual of Singapore Exchange
Securities Trading Limited (“SGX-ST”)) can be found under “Board of Directors” and “Additional Information on Directors seeking
Re-Election” in the Company’s Annual Report 2022.

Resolution 5

Mr Lau Ping Sum Pearce, Chairman of Remuneration Committee and a member of Audit Committee and a member of Nominating
Committee, will continue to serve in these capacities if re-elected as a Director of the Company. Mr Lau is an Independent
Director.

Detailed information on Mr Lau (including information as set out in Appendix 7.4.1. of the Listing Manual of SGX-ST) can be found
under “Board of Directors” and “Additional Information on Directors seeking Re-Election” in the Company’s Annual Report 2022.

Resolution 6

Mr Li Lei, Non-Executive and Non-Independent Director, a member of Remuneration Committee and a member of Nominating
Committee, will continue to serve in these capacities if re-elected as a Director of the Company.

Detailed information on Mr Li (including information as set out in Appendix 7.4.1. of the Listing Manual of SGX-ST) can be found
under “Board of Directors” and “Additional Information on Directors seeking Re-Election” in the Company’s Annual Report 2022.

176 SUNPOWER GROUP LTD.

NOTICE OF ANNUAL
GENERAL MEETING
Resolution 8

Resolution 8, if passed, will empower the Directors of the Company to issue shares in the capital of the Company and to make or
grant instruments (such as warrants or debentures) convertible into shares, and to issue shares in pursuance of such instruments,
up to a number not exceeding in total fifty per cent. (50%) of the total number of issued shares (excluding treasury shares and
subsidiary holdings (if any)) in the capital of the Company, with a sub-limit of twenty per cent. (20%) for issues other than on a pro
rata basis to shareholders. For the purpose of determining the aggregate number of shares that may be issued, the percentage
of issued shares shall be based on the total number of issued shares (excluding treasury shares and subsidiary holdings (if any))
in the capital of the Company at the time this resolution is passed, after adjusting for (a) new shares arising from the conversion
or exercise of any convertible securities or share options or vesting of share awards which were issued and are outstanding or
subsisting at the time this resolutions passed, and (b) any subsequent bonus issue or consolidation or subdivision of shares.

Resolution 9

Resolution 9, if passed, will empower the Board of Directors of the Company to allot and issue shares in the issued capital of the
Company pursuant to the exercise of the options under the Sunpower Employee Share Option Scheme 2015 provided that the
aggregate nominal amount of shares over which the options are granted does not exceed 15 percent of the issued share capital
of the Company from time to time.

Notes:

(1) As part of the measure to minimise the risk of community spread of COVID-19, the Company will arrange for a live webcast, which allows shareholders to view
the proceedings of the Annual General Meeting (“AGM”) via a “live” audio and video feed (“Webcast”). In addition, shareholders will be able to observe the
AGM proceedings by audio only means (“Audio Link”). Shareholders who wish to observe the AGM proceedings by Webcast or Audio Link must pre-register
via the pre-registration website at URL https://conveneagm.sg/sunpowergroup2023 by 10:00 a.m. on 26 April 2023 (“Registration Deadline”). A shareholder
who wishes to appoint a person (other than the Chairman of the AGM) as a proxy to attend, speak and vote at the AGM on his/her/its behalf must also submit
a signed Depositor Proxy Form (together with the power of attorney or other authority under which it is signed (if applicable) or a notarially certified copy
thereof), together with a valid email address for the appointed proxy, by the Registration Deadline.

Following verification of their shareholding status, shareholders will receive further instructions on how to access the Webcast and the Audio Link via email
(“Registration Confirmation Email”) by 27 April 2023. The Registration Confirmation Email will also be sent to any proxy who has been specified in a signed
Depositor Proxy Form submitted by a shareholder no later than the Registration Deadline, to the email indicated in the registration.

Shareholders who have pre-registered by the Registration Deadline but do not receive the Registration Confirmation Email by 2:00 p.m. on 27 April 2023
should contact the Company at [email protected] stating: (a) the shareholder’s full name; and (b) the shareholder’s identification/registration number.

Proxies who do not receive the Registration Confirmation Email by 2:00 p.m. on 27 April 2023 should contact the Company via email at ir@sunpowergroup.
com.cn stating: (a) the appointing shareholder’s full name; (b) the appointing shareholder’s identification/registration number; (c) the proxy’s full name; and (d)
the proxy’s identification/registration number.

(2) The Company has put in place arrangements to allow shareholders to be able to communicate with each other and the Board of Directors electronically during
the course of the AGM. Shareholders viewing the Webcast or listening to the Audio Link will be able to submit questions electronically in real time during the
AGM. Alternatively, shareholders may wish to submit any questions they may have by 10:00 a.m. on 21 April 2023:

(a) in hard copy to the office of the Company’s Singapore Share Transfer Agent, In.Corp Corporate Services Pte. Ltd., at 30 Cecil Street, #19-08 Prudential
Tower, Singapore 049712;

(b) via email to [email protected]; or

(c) via the pre-registration website at URL https://conveneagm.sg/sunpowergroup2023.

Shareholders submitting questions are required to state: (a) their full name; and (b) their identification/registration number, failing which the Company shall be
entitled to regard the submission as invalid and not respond to the questions submitted.

The Company will provide responses to substantial and relevant questions prior to the AGM through publication on SGXNet and the Company’s website at
URL http://www.sunpowergroup.com.cn/, or at the AGM.

ANNUAL REPORT 2022 177

NOTICE OF ANNUAL
GENERAL MEETING
(3) The Company will provide the shareholders with the means to vote electronically in real time at the AGM. Alternatively, shareholders may also wish to vote by
proxy. As the AGM will be broadcast to shareholders by way of the Webcast and Audio Link, shareholders who wish to vote at the AGM may:

(a) (where such shareholders are individuals) vote live at the AGM, electronically in real time; or

(b) (where such shareholders are individuals or corporates):

(i) appoint the Chairman of the AGM to act as their proxy to attend, speak and vote at the AGM on their behalf; or

(ii) appoint a proxy (other than the Chairman of the AGM) to attend, speak and vote at the AGM on their behalf.

Where a shareholder appoints a proxy (whether the Chairman of the AGM or otherwise) to attend, speak and vote at the AGM on his/her/its behalf, he/she/it
should specifically direct how he/she/it wishes to vote, whether for or against (or abstain from voting on) the resolutions, in the Depositor Proxy Form. Where
a shareholder appoints the Chairman of the AGM as proxy and no specific instructions as to voting, or abstentions from voting, are given, the appointment of
the Chairman of the AGM as proxy for such resolution will be treated as invalid.

The signed Depositor Proxy Form, together with the power of attorney or other authority under which it is signed (if applicable) or a notarially certified true
copy thereof, must be:

(a) lodged at the office of the Company’s Singapore Share Transfer Agent, In.Corp Corporate Services Pte. Ltd., at 30 Cecil Street, #19-08 Prudential
Tower, Singapore 049712; or

(b) submitted via email to [email protected],

in either case, by no later than 10:00 a.m. on 26 April 2023, failing which the Company shall be entitled to regard the Depositor Proxy Form as invalid.

The Depositor Proxy Form must be signed by the appointor or his attorney duly authorised in writing. Where the Depositor Proxy Form is executed by a
corporation, it must be either under its common seal or signed on its behalf by a duly authorised officer or attorney. Where the Depositor Proxy Form is signed
on behalf of the appointor by an attorney, the power of attorney appointing the attorney or other authority, or a notarially certified copy thereof, if any, under
which the Depositor Proxy Form is signed must (unless previously registered with the Company) be lodged with the Depositor Proxy Form, failing which the
Company shall be entitled to regard the Depositor Proxy Form as invalid.

The Company shall be entitled to reject the Depositor Proxy Form if it is incomplete, improperly completed, illegible or where the true intentions of the
appointor are not ascertainable from the instructions of the appointor specified in the Depositor Proxy Form (such as in the case where the appointor submits
more than one (1) Depositor Proxy Form).

In the case of a shareholder whose shares are entered against his/her name in the Depository Register, the Company may reject any Depositor Proxy Form
lodged if such shareholder, being the appointor, is not shown to have shares entered against his/her name in the Depository Register as at 48 hours before
the time appointed for holding the AGM, as certified by The Central Depository (Pte) Limited (CDP) to the Company.

Shareholders who hold their shares through a Relevant Intermediary (as defined in section 181 of the Companies Act 1967) should not use the Depositor Proxy
Form and should contact their relevant intermediaries as soon as possible to specify voting instructions.

(4) All documents relating to the business of the AGM will be published on SGXNet and the Company’s website at URL http://www.sunpowergroup.com.cn/.

Personal Data Privacy

By pre-registering for the Webcast and/or the Audio Link, submitting a Depositor Proxy Form, and/or submitting questions relating to the resolution to be tabled for
approval at the AGM or the Company’s businesses and operations, you consent to the collection, use and disclosure of your personal data by the Company (or its
agents or service providers) for the purpose of (i) administering the Webcast and the Audio Link (including, but not limited to, verifying your identity and shareholding
status, registering an account for you to access the Webcast and/or the Audio Link, facilitating and administering the Webcast and Audio Link and disclosing your
personal data to the Company’s agents or third-party service provider for any such purposes), (ii) the processing of any questions submitted to the Company, (iii) the
processing, administration and analysis by the Company (or its agents or service providers) of the appointment of a proxy for the AGM (including any adjournment
thereof) and the preparation and compilation of the attendance lists, minutes and other instruments relating to the AGM (including any adjournment thereof), and (iv)
enabling the Company (or its agents or service providers) to comply with any applicable laws, listing rules, take-over rules, regulations and/or guidelines.

178 SUNPOWER GROUP LTD.

ADDITIONAL INFORMATION ON
DIRECTORS SEEKING RE- ELECTION
Mr Ma Ming, Mr Lau Ping Sum Pearce and Mr Li Lei are the Directors seeking re-election (“Retiring Directors”) at the forthcoming
annual general meeting of the Company to be convened on 28 April 2023.

Pursuant to Rule 720(6) of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), the information
relating to the Retiring Directors as set out in Appendix 7.4.1 to the Listing Manual of the SGX-ST is set out below:

Name of Director Ma Ming Lau Ping Sum Pearce Li Lei

Date of Appointment 12 May 2004 2 February 2005 3 March 2017
Date of last re-appointment 24 June 2020 24 June 2020 24 June 2020
Age 58 83 42
Country of principal residenwce People’s Republic of China Singapore People’s Republic of China
The Board’s comments on The re-election of Mr Ma The re-election of Mr Lau The re-election of Mr Li Lei
this appointment (including Ming as the Executive Ping Sum Pearce as the as the Non-Executive and
rationale, selection criteria, Director and Chief Executive Independent Director was Non-Independent Director
board diversity consideration Officer was recommended recommended by the was recommended by the
and the search and nomination by the Nominating Nominating Committee Nominating Committee
process) Committee and the Board and the Board of Directors and the Board of Directors
of Directors has accepted has accepted the has accepted the
the recommendation, after recommendation, after recommendation, after taking
taking into consideration Mr taking into consideration into consideration Mr Li Lei’s
Ma Ming’s qualifications, Mr Lau Ping Sum Pearce’s qualifications, expertise past
expertise, past experiences qualifications, expertise, experiences and overall
and overall contribution past experiences and overall contribution since he was
since he was appointed as a contribution since he was appointed as a Director of
Director of the Company. appointed as a Director of the Company.
the Company.
Whether appointment is Executive, Mr Ma Ming is Non-Executive and Non-Executive and Non-
executive, and if so, the area of primarily responsible for the Independent Independent
responsibility overall management and
operational development of
the Group.
Job Title (e.g. Lead ID, AC Executive Director and Chief RC Chairman, AC member RC member and NC member
Chairman, AC Member etc.) Executive Officer and NC member
Professional qualifications Master Degree in Engineering Bachelor of Economics Bachelor Degrees in Law and
Management (Australian National Economics
University) Master Degree in Law
Diploma in Business
Administration (University of
Singapore)

ANNUAL REPORT 2022 179

ADDITIONAL INFORMATION ON
DIRECTORS SEEKING RE- ELECTION
Name of Director Ma Ming Lau Ping Sum Pearce Li Lei
Working experience and 2008 – 2015: Director, 1997 – 2020: Independent 2011 –2015: Executive
occupation(s) during the past General Manager, Jiangsu Director, Huan Hsin Holdings Director, Dinghui Equity
10 years Sunpower Technology Co., Ltd. (Listed on Singapore Investment Management
Ltd. Exchange) (Tianjin) Co., Ltd.

2008 – 2015: Director,

General Manager, Jiangsu
Sunpower Machinery
Manufacture Co., Ltd.

2014 – 2015: Director,

General Manager, Sunpower
Technology (Jiangsu) Co.,
Ltd.
Shareholding interest in the Deemed interest – Nil Nil
listed issuer and its subsidiaries 137,509,737 ordinary shares
Any relationship (including None None None
immediate family relationships)
with any existing director,
existing executive officer,
the issuer and/or substantial
shareholder of the listed
issuer or of any of its principal
subsidiaries
Conflict of interest (including None None None
any competing business)
Undertaking (in the format set Yes Yes Yes
out in Appendix 7.7) under Rule
720(1) has been submitted to
the listed issuer
Other Principal Commitments* Including Directorships#
* “Principal Commitments” has the same meaning as defined in the Code.
# These fields are not applicable for announcements of appointments pursuant to Listing Rule 704(9)
Past (for the last 5 years) None 1997 – 2020: Independent None
Director, Huan Hsin Holdings
Ltd. (Listed on Singapore
Exchange)

180 SUNPOWER GROUP LTD.

ADDITIONAL INFORMATION ON
DIRECTORS SEEKING RE- ELECTION
Name of Director Ma Ming Lau Ping Sum Pearce Li Lei
Present 2004 – Present: Executive 2002 – Present: Independent 2016 – Present: Managing
Director and Chief Executive Director, Cortina Holdings Director, CDH Investments
Officer, Sunpower Group Ltd. Limited (Listed on Singapore Management (Hong Kong)
Exchange) Limited

2019 – Present: Independent

Director, Non-Executive
Chairman of the Board,
H2G Green Ltd. (Listed on
Singapore Exchange)

2005 – Present: Member,

Singapore Institute of
Directors

2008 – Present: Member,

Programme Advisory
Committee for BA Translation
and Interpretation

2008 – Present: Examiner,

Certification Examination for
Professional Interpreters,
School of Arts and Social
Sciences, Singapore
University of Social Sciences

2008 – Present: Member of

the Singapore University of
Social Sciences Programme
Advisory Committee for BA
Translation and Interpretation

2020 – Present: Chairman of

the Singapore University of
Social Sciences Programme
Advisory Committee for BA
Translation and Interpretation
Disclose the following matters concerning an appointment of director, chief executive officer, chief financial officer,
chief operating officer, general manager or other officer of equivalent rank. If the answer to any question is “yes”, full
details must be given.
(a) Whether at any time No No No
during the last 10 years,
an application or a petition
under any bankruptcy law
of any jurisdiction was filed
against him/her or against
a partnership of which he/
she was a partner at the
time when he/she was a
partner or at any time within
2 years from the date he/
she ceased to be a partner?

ANNUAL REPORT 2022 181

ADDITIONAL INFORMATION ON
DIRECTORS SEEKING RE- ELECTION
Name of Director Ma Ming Lau Ping Sum Pearce Li Lei
(b) Whether at any time No No No
during the last 10 years,
an application or a petition
under any law of any
jurisdiction was filed against
an entity (not being a
partnership) of which he/
she was a director or an
equivalent person or a
key executive, at the time
when he/she was a director
or an equivalent person
or a key executive of that
entity or at any time within
2 years from the date he/
she ceased to be a director
or an equivalent person
or a key executive of that
entity, for the winding up
or dissolution of that entity
or, where that entity is the
trustee of a business trust,
that business trust, on the
ground of insolvency?
(c) Whether there is any No No No
unsatisfied judgment
against him?
(d) Whether he/she has ever No No No
been convicted of any
offence, in Singapore
or elsewhere, involving
fraud or dishonesty
which is punishable with
imprisonment, or has been
the subject of any criminal
proceedings (including
any pending criminal
proceedings of which he/
she is aware) for such
purpose?
(e) Whether he/she has ever No No No
been convicted of any
offence, in Singapore
or elsewhere, involving
a breach of any law or
regulatory requirement that
relates to the securities
or futures industry in
Singapore or elsewhere,
or has been the subject of
any criminal proceedings
(including any pending
criminal proceedings of
which he/she is aware) for
such breach?

182 SUNPOWER GROUP LTD.

ADDITIONAL INFORMATION ON
DIRECTORS SEEKING RE- ELECTION
Name of Director Ma Ming Lau Ping Sum Pearce Li Lei
(f) Whether at any time No No No
during the last 10 years,
judgment has been
entered against him/her
in any civil proceedings in
Singapore or elsewhere
involving a breach of
any law or regulatory
requirement that relates
to the securities or futures
industry in Singapore or
elsewhere, or a finding of
fraud, misrepresentation
or dishonesty on his
part, or he/she has been
the subject of any civil
proceedings (including any
pending civil proceedings
of which he/she is aware)
involving an allegation of
fraud, misrepresentation or
dishonesty on his part?
(g) Whether he/she has No No No
ever been convicted in
Singapore or elsewhere of
any offence in connection
with the formation or
management of any entity
or business trust?
(h) Whether he/she has ever No No No
been disqualified from
acting as a director or
an equivalent person of
any entity (including the
trustee of a business
trust), or from taking part
directly or indirectly in the
management of any entity
or business trust?
(i) Whether he/she has No No No
ever been the subject
of any order, judgment
or ruling of any court,
tribunal or governmental
body, permanently or
temporarily enjoining him
from engaging in any type
of business practice or
activity?

ANNUAL REPORT 2022 183

ADDITIONAL INFORMATION ON
DIRECTORS SEEKING RE- ELECTION
Name of Director Ma Ming Lau Ping Sum Pearce Li Lei
(j) Whether he/she has No No No
ever, to his knowledge,
been concerned with the
management or conduct, in
Singapore or elsewhere, of
the affairs of:–

(i) any corporation

which has been
investigated for a
breach of any law or
regulatory requirement
governing corporations
in Singapore or
elsewhere; or
(ii) any entity (not being a
corporation) which has
been investigated for
a breach of any law or
regulatory requirement
governing such
entities in Singapore or
elsewhere; or
(iii) any business trust
which has been
investigated for a
breach of any law or
regulatory requirement
governing business
trusts in Singapore or
elsewhere; or
(iv) any entity or business
trust which has been
investigated for a
breach of any law or
regulatory requirement
that relates to the
securities or futures
industry in Singapore or
elsewhere ,

in connection with any

matter occurring or arising
during that period when he/
she was so concerned with
the entity or business trust?

184 SUNPOWER GROUP LTD.

ADDITIONAL INFORMATION ON
DIRECTORS SEEKING RE- ELECTION
Name of Director Ma Ming Lau Ping Sum Pearce Li Lei
(k) Whether he/she has been No No No
the subject of any current
or past investigation or
disciplinary proceedings,
or has been reprimanded
or issued any warning, by
the Monetary Authority
of Singapore or any other
regulatory authority,
exchange, professional
body or government
agency, whether in
Singapore or elsewhere?
Disclosure applicable to the appointment of Director only
Any prior experience as a Not applicable. This relates Not applicable. This relates Not applicable. This relates
director of an issuer listed on to the re-appointment of to the re-appointment of to the re-appointment of
the Exchange? Director. Director. Director.

If yes, please provide details of

prior experience.

If no, please state if the

director has attended or will be
attending training on the roles
and responsibilities of a director
of a listed issuer as prescribed
by the Exchange.

Please provide details of

relevant experience and the
nominating committee’s reasons
for not requiring the director to
undergo training as prescribed
by the Exchange (if applicable).

ANNUAL REPORT 2022 185

ANNUAL REPORT 2022

Sunpower Group Ltd.

No. 2111 Chengxin Avenue
High-tech Industrial Park Jiangning
District,
Nanjing, Jiangsu, 211112
People’s Republic of China

Registered Address:
Victoria Place, 5th Floor
31 Victoria Street
Hamilton HM 10
Bermuda