Financial Highlights [Consolidated Income Statement](index=2&type=section&id=Consolidated%20Income%20Statement) In the first half of 2023, the company achieved a significant turnaround, with net profit reaching RMB 43.5 million compared to a loss of RMB 68.3 million in the prior year, driven by a 149.1% increase in total revenue to RMB 910 million and a substantial 183.9% rise in gross profit Consolidated Income Statement Key Metrics (For the six months ended June 30) | Indicator | 2023 (RMB '000) | 2022 (RMB '000, Restated) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 909,819 | 365,267 | +149.1% | | Gross Profit | 145,934 | 51,393 | +183.9% | | Operating Profit/(Loss) | 75,986 | (47,308) | Turnaround to Profit | | Profit/(Loss) for the Period | 43,491 | (68,255) | Turnaround to Profit | | Profit/(Loss) Attributable to Equity Holders of the Company | 37,102 | (65,240) | Turnaround to Profit | | Basic Earnings/(Loss) Per Share (RMB cents) | 13 | (24) | Turnaround to Profit | [Consolidated Balance Sheet](index=4&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2023, the company's total assets were RMB 3.70 billion, with total liabilities at RMB 3.04 billion, while net assets decreased to RMB 661 million from RMB 918 million at the end of 2022, primarily due to the consideration paid for the acquisition of Jilin Modern Zhongqing Consolidated Balance Sheet Key Metrics | Indicator | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000, Restated) | Change | | :--- | :--- | :--- | :--- | | Non-current Assets | 487,997 | 493,793 | -1.2% | | Current Assets | 3,208,753 | 3,689,191 | -13.0% | | **Total Assets** | **3,696,750** | **4,182,984** | **-11.6%** | | Current Liabilities | 2,944,798 | 3,172,465 | -7.2% | | Non-current Liabilities | 91,082 | 92,509 | -1.5% | | **Total Liabilities** | **3,035,880** | **3,264,974** | **-7.0%** | | **Net Assets** | **660,870** | **918,010** | **-28.0%** | | Cash and Cash Equivalents | 131,057 | 220,233 | -40.5% | | Bank and Other Loans (Current + Non-current) | 819,420 | 1,053,713 | -22.2% | Notes to Financial Statements [Basis of Preparation and Accounting Policies](index=7&type=section&id=1.%20Basis%20of%20Preparation%20and%20Accounting%20Policies) This interim financial information is prepared in accordance with IAS 34, with comparative figures for 2022 restated due to the acquisition of Jilin Modern Zhongqing, a business combination under common control, and management has assessed the group's liquidity, deeming the going concern basis appropriate - Due to the acquisitions of Jilin Modern Zhongqing and Jilin Jinghe Design, these common control business combinations have been accounted for under merger accounting principles, and comparative figures for the corresponding period in 2022 have been restated accordingly[11](index=11&type=chunk) - Management has formulated multiple initiatives, including accelerating collections, negotiating payments, securing new financing, and obtaining financial support commitments from the controlling shareholder, to address liquidity needs and believes the Group has sufficient funds for continued operation[12](index=12&type=chunk)[13](index=13&type=chunk) [Revenue and Segment Reporting](index=9&type=section&id=3.%20Revenue%20and%20Segment%20Reporting) During the reporting period, the company's operations were categorized into three segments: Urban Renewal Construction Services, Urban Operation and Maintenance Services, and Design and Consulting Services, with total revenue of RMB 910 million, where Urban Renewal Construction Services served as the primary driver for both revenue and gross profit, contributing over 85% of revenue and nearly 80% of gross profit, achieving robust growth Revenue by Segment (For the six months ended June 30) | Segment | 2023 (RMB '000) | 2022 (RMB '000, Restated) | YoY Change | | :--- | :--- | :--- | :--- | | Urban Renewal Construction Services | 783,582 | 277,212 | +182.7% | | Urban Operation and Maintenance Services | 61,674 | 69,436 | -11.2% | | Design and Consulting Services | 64,563 | 18,619 | +246.8% | | **Total** | **909,819** | **365,267** | **+149.1%** | Gross Profit by Segment (For the six months ended June 30) | Segment | 2023 (RMB '000) | 2022 (RMB '000, Restated) | YoY Change | | :--- | :--- | :--- | :--- | | Urban Renewal Construction Services | 115,975 | 36,258 | +219.9% | | Urban Operation and Maintenance Services | 9,977 | 18,193 | -45.2% | | Design and Consulting Services | 19,982 | (3,058) | Turnaround to Profit | | **Total** | **145,934** | **51,393** | **+183.9%** | - All of the Group's revenue is derived from China, with no significant assets or operations outside of China[24](index=24&type=chunk) [Notes on Key Financial Items](index=13&type=section&id=Notes%20on%20Key%20Financial%20Items) This section details key items impacting profit and loss and financial position, including a decrease in finance costs due to reduced exchange losses, a significant over 200% year-on-year increase in R&D costs, and a long aging profile for trade receivables, with approximately 46% overdue by more than one year [Profit/(Loss) Before Tax](index=13&type=section&id=4.%20Profit%2F%28Loss%29%20Before%20Tax) Finance costs decreased by 11.0% year-on-year to RMB 32.33 million, primarily due to the absence of exchange losses on bank loans this period, while R&D costs significantly increased by 213% to RMB 54.42 million, reflecting increased investment in research and development - Finance costs decreased from RMB 36.30 million in the prior year to **RMB 32.33 million**, primarily due to no exchange losses on bank loans recorded in the current period[25](index=25&type=chunk) - Research and development costs significantly increased from RMB 17.38 million in the prior year to **RMB 54.42 million**, a year-on-year increase of **213%**[26](index=26&type=chunk) [Income Tax](index=14&type=section&id=5.%20Income%20Tax) The Group's income tax expense was RMB 2.59 million, compared to a tax credit of RMB 10.25 million in the prior year, a change primarily driven by the company's shift from loss to profit, with four Chinese subsidiaries recognized as high-tech enterprises enjoying a preferential 15% corporate income tax rate - Four of the Group's Chinese subsidiaries are recognized as high-tech enterprises, enjoying a preferential income tax rate of **15%** and a **100%** super deduction for R&D expenses[28](index=28&type=chunk) [Earnings/(Loss) Per Share](index=15&type=section&id=6.%20Earnings%2F%28Loss%29%20Per%20Share) Basic and diluted earnings per share for the first half of 2023 were RMB 13 cents, a significant improvement compared to a loss of RMB 24 cents per share in the prior year, with no potentially dilutive outstanding shares during the reporting period Earnings/(Loss) Per Share Calculation | Indicator | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 (Restated) | | :--- | :--- | :--- | | Profit/(Loss) Attributable to Equity Holders of the Company (RMB '000) | 37,102 | (65,240) | | Number of Ordinary Shares in Issue (shares) | 275,000,000 | 275,000,000 | | Basic and Diluted Earnings/(Loss) Per Share (RMB cents) | 13 | (24) | [Contract Assets and Liabilities](index=15&type=section&id=7.%20Contract%20Assets%20and%20Liabilities) As of the period end, net contract assets decreased to RMB 922 million from RMB 1.056 billion at the beginning of the year, and contract liabilities also decreased to RMB 429 million from RMB 583 million, with all contract liabilities expected to be recognized as revenue within one year Contract Assets and Liabilities Balances | Item | June 30, 2023 (RMB '000) | December 31, 2022 (RMB '000, Restated) | | :--- | :--- | :--- | | Contract Assets (net of loss allowance) | 922,096 | 1,055,709 | | Contract Liabilities | 428,885 | 583,036 | [Trade and Bills Receivables](index=17&type=section&id=8.%20Trade%20and%20Bills%20Receivables) As of the period end, net trade and bills receivables were RMB 1.556 billion, largely consistent with the beginning of the year, but aging analysis reveals approximately 46% (RMB 716 million) are over one year old, indicating collection pressure Trade and Bills Receivables Aging Analysis (Net of loss allowance) | Aging | June 30, 2023 (RMB '000) | Percentage | | :--- | :--- | :--- | | Within 1 year | 839,774 | 54.0% | | 1 to 2 years | 363,983 | 23.4% | | 2 to 3 years | 151,629 | 9.7% | | Over 3 years | 200,962 | 12.9% | | **Total** | **1,556,348** | **100.0%** | [Trade and Bills Payables](index=18&type=section&id=9.%20Trade%20and%20Bills%20Payables) As of the period end, total trade and bills payables were RMB 1.131 billion, a decrease from RMB 1.237 billion at the beginning of the year, with approximately 46% (RMB 526 million) of payables aged over one year Trade and Bills Payables Aging Analysis | Aging | June 30, 2023 (RMB '000) | Percentage | | :--- | :--- | :--- | | Within 1 year | 605,664 | 53.5% | | 1 to 3 years | 362,525 | 32.1% | | Over 3 years | 163,283 | 14.4% | | **Total** | **1,131,472** | **100.0%** | [Dividends](index=19&type=section&id=10.%20Dividends) The Board of Directors does not recommend the payment of any interim dividend for the six months ended June 30, 2023 - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2023 (H1 2022: Nil)[41](index=41&type=chunk) Management Discussion and Analysis [Business Review](index=20&type=section&id=Business%20Review) In the first half of 2023, the Group significantly expanded its business, securing new contracts totaling RMB 2,209 million, a 1278.9% year-on-year increase, successfully winning several large projects exceeding RMB 100 million, particularly achieving new breakthroughs in the Changchun area, while its subsidiaries received multiple industry awards for quality engineering - In the first half of 2023, the Group submitted **272 bids**, with a successful bid rate of approximately **41.54%**, securing new project contracts worth approximately **RMB 2,209 million**[43](index=43&type=chunk) - Major projects won include: Changchun New Area Urban Improvement Project (approx. **RMB 752 million**), Jingyuetan Scenic Area Infrastructure Project (approx. **RMB 459 million**), and Yitong River Basin Ecological Restoration Project (approx. **RMB 524 million**)[43](index=43&type=chunk)[46](index=46&type=chunk) - Subsidiaries including Jinghe Design Group, Zhongbang Ecological Environment, and Changchun Urban Construction Maintenance received multiple provincial and national quality engineering awards and corporate honors during the reporting period[44](index=44&type=chunk) [Outlook](index=22&type=section&id=Outlook) Looking ahead, the Group will capitalize on national policy opportunities in the "14th Five-Year Plan," urban renewal, and cultural tourism integration, leveraging its "culture, commerce, tourism, and engineering integrated" synergistic advantage, while consolidating its Changchun base, planning to expand into national markets like Tianjin, Chongqing, and Beijing, and extending into full-process consulting services to achieve sustained healthy development - The Group will leverage national policy support for cultural tourism, urban renewal, and infrastructure construction, especially the investment from local government special bonds, to expand its business[46](index=46&type=chunk) - Strategic priorities include: leveraging the "culture, commerce, tourism, and engineering integrated" synergistic business advantage, consolidating the Changchun market while expanding into national cities such as Tianjin, Chongqing, Beijing, Shandong, and Guangzhou, and planning to jointly explore markets with partners[47](index=47&type=chunk) - The company will continue to upgrade qualifications, stabilize and enhance corporate credit, and actively apply for various outstanding design and engineering awards, laying a solid foundation for performance growth[47](index=47&type=chunk) [Financial Review](index=24&type=section&id=Financial%20Review) The Group demonstrated strong financial performance, with total revenue increasing by 149.1% to RMB 910 million and gross profit rising by 183.8% to RMB 146 million, primarily driven by the Urban Renewal Construction Services segment, which saw revenue growth of 182.7%, attributed to a low base effect from COVID-19 lockdowns in the prior year and an increase in newly approved large contracts this period Revenue Performance by Segment (For the six months ended June 30) | Segment | 2023 Revenue (RMB million) | 2022 Revenue (RMB million, Restated) | YoY Change | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Urban Renewal Construction Services | 783.6 | 277.2 | +182.7% | Increase in newly approved large contracts | | Urban Operation and Maintenance Services | 61.7 | 69.4 | -11.1% | A large-scale environmental sanitation project expired in 2022 | | Design and Consulting Services | 64.6 | 18.6 | +247.3% | Undertaking newly approved large consulting projects | - The significant overall revenue growth was primarily due to: (i) a lower base in H1 2022 caused by COVID-19 lockdowns in Changchun; and (ii) an increase in newly approved contracts in H1 2023[48](index=48&type=chunk) - Administrative expenses increased by **12.5%**, mainly due to increased intermediary fees related to the acquisition of Jilin Modern Zhongqing[55](index=55&type=chunk) - Finance costs decreased by **11.0%**, primarily because no net exchange losses on bank loans were recorded in the first half of 2023[56](index=56&type=chunk) [Liquidity and Capital Structure](index=27&type=section&id=Liquidity%20and%20Capital%20Structure) As of the period end, the Group held cash and cash equivalents of RMB 131 million, while net current assets significantly decreased from RMB 517 million to RMB 264 million due to the consideration paid for the acquisition of Jilin Modern Zhongqing, and the gearing ratio slightly increased from 1.1 times to 1.2 times due to a reduction in total equity Liquidity and Capital Structure Key Metrics | Indicator | June 30, 2023 | December 31, 2022 (Restated) | | :--- | :--- | :--- | | Cash and Cash Equivalents (RMB million) | 131.1 | 220.2 | | Total Borrowings (RMB million) | 819.4 | 1,053.7 | | Net Current Assets (RMB million) | 264.0 | 516.7 | | Gearing Ratio (Borrowings/Total Equity) | 1.2 times | 1.1 times | - The decrease in net current assets was primarily due to the payment of consideration to Zhongqing Investment for the acquisition of Jilin Modern Zhongqing[61](index=61&type=chunk) [Significant Acquisitions and Investments](index=27&type=section&id=Significant%20Acquisitions%20and%20Investments) During the reporting period, the Group completed a significant acquisition of an 87.5% equity interest in Jilin Modern Zhongqing on June 30, 2023, with no other major acquisitions, disposals, or significant investment matters - Apart from the acquisition of an **87.5%** equity interest in Jilin Modern Zhongqing completed on June 30, 2023, the Group had no other significant acquisitions or disposals in the first half of 2023[64](index=64&type=chunk) [Contingent Liabilities](index=28&type=section&id=Contingent%20Liabilities) As of the period end, the Group had contingent liabilities primarily from providing financial guarantees for bank loans of its joint venture, Tianjun Tourism, and associate, Changchun Xianbang, with the total unamortized balance of issued financial guarantees amounting to approximately RMB 30.1 million as of June 30, 2023 - The Group provided guarantees for bank loans of its joint venture, Tianjun Tourism, with an outstanding loan balance of **RMB 330 million**, and the Group's unamortized guarantee balance was **RMB 20.171 million**[66](index=66&type=chunk) - The Group provided guarantees for bank loans of its associate, Changchun Xianbang, with an outstanding loan balance of **RMB 170 million**, and the Group's unamortized guarantee balance was **RMB 9.879 million**[66](index=66&type=chunk) Other Information [Dividend Policy](index=29&type=section&id=Dividend%20Policy) The Board of Directors has recommended not to declare an interim dividend for the first half of 2023 - The Board of Directors recommends no interim dividend for the first half of 2023 (H1 2022: Nil)[69](index=69&type=chunk) [Employee and Remuneration Policy](index=29&type=section&id=Employee%20and%20Remuneration%20Policy) As of June 30, 2023, the Group had 844 employees, and the company has established a remuneration committee and a systematic remuneration management policy to ensure fairness and transparency in its compensation system - As of June 30, 2023, the Group had **844 employees**[70](index=70&type=chunk) [Corporate Governance](index=30&type=section&id=Corporate%20Governance) The company has adopted the Corporate Governance Code in Appendix 14 of the Listing Rules, and its audit committee, comprising three independent non-executive directors, has reviewed the unaudited interim results for the current period - The company's audit committee, composed of three independent non-executive directors, has reviewed the Group's unaudited interim results and interim financial report for the six months ended June 30, 2023[73](index=73&type=chunk)

Financial Performance - Revenue for the year ended December 31, 2022, was RMB 653,441 thousand, a decrease of 30.2% from RMB 936,595 thousand in 2021[23] - Gross profit decreased by 36.6% to RMB 134,004 thousand from RMB 211,230 thousand in the previous year[23] - The company reported a loss before tax of RMB 124,560 thousand, compared to a profit of RMB 37,006 thousand in 2021, representing a decline of 436.6%[23] - Net loss for the year was RMB 106,004 thousand, a significant decrease from a profit of RMB 33,410 thousand in 2021, marking a decline of 417.3%[23] - Basic and diluted loss per share was RMB (39), compared to earnings of RMB 12 in the previous year, reflecting a decrease of 425.0%[23] - The company’s revenue for the fiscal year 2022 decreased by approximately 30.2% to RMB 653.4 million from RMB 936.6 million in the fiscal year 2021, primarily due to the impact of COVID-19 lockdowns in Changchun[37] Assets and Liabilities - Non-current assets increased slightly by 1.6% to RMB 391,990 thousand from RMB 385,865 thousand in 2021[23] - Current assets rose by 3.2% to RMB 2,058,323 thousand, compared to RMB 1,993,922 thousand in the previous year[23] - Current liabilities increased by 12.3% to RMB 1,951,668 thousand from RMB 1,738,198 thousand in 2021[23] - Total equity decreased by 19.4% to RMB 486,950 thousand from RMB 604,077 thousand in the previous year[23] Revenue Sources - The main sources of revenue in fiscal year 2022 were landscaping (approximately 75.9%), ecological restoration (11.1%), and others (13.0%) of total revenue[26] - The landscaping segment's revenue fell by approximately 29.7% to RMB 496.1 million in fiscal year 2022 from RMB 705.4 million in fiscal year 2021, largely due to pandemic-related construction delays[39] - The revenue from the ecological restoration segment decreased by approximately 51.7% from RMB 150.6 million in FY2021 to RMB 72.8 million in FY2022, primarily due to COVID-19 lockdowns in Changchun[40] - The revenue from other segments increased by approximately 5.0% from RMB 80.6 million in FY2021 to RMB 84.6 million in FY2022, attributed to more projects won and completed[41] Project Bidding and Success - The company submitted 403 bids in fiscal year 2022, an increase of 27.5% from the previous year, with a bid success rate of 19.6%, up by 6 percentage points[26] - The total value of successful bids increased from approximately RMB 443.9 million in fiscal year 2021 to about RMB 1,053.2 million in fiscal year 2022[26] - The number of completed projects in the fiscal year 2022 was 71, with 287 ongoing projects at year-end, reflecting an increase in total project numbers due to a higher bid success rate[38] Employee and Operational Management - As of December 31, 2022, the company had 555 employees, with a total employee cost of RMB 121.7 million for the fiscal year[28] - The company emphasizes continuous professional development for its employees, focusing on enhancing technical capabilities and skills[30] - The company aims to enhance its core competitiveness through continuous technological innovation and expand its municipal business operations[36] - The company will continue to strengthen its operational capabilities and talent training to support its strategic objectives in 2023[36] Financial Risks and Credit Management - The group faces various business risks, including economic conditions and changes in local government spending, which could significantly impact performance[69] - Financial risks include credit risk, liquidity risk, interest rate risk, and foreign exchange risk, with a low currency risk due to operations primarily in RMB[72] - The group has implemented policies to ensure sales are made to customers with appropriate credit records, resulting in limited credit risk[73] Corporate Governance - The company has adopted the corporate governance code as outlined in Appendix 14 of the Listing Rules, except for the provision C.2.1, which states that the roles of Chairman and CEO should be separate[89] - The board consists of eight members, including two executive directors, three non-executive directors, and three independent non-executive directors[91] - The company emphasizes high standards of corporate governance to ensure integrity, transparency, and effective internal management measures[89] - The board is responsible for leading and monitoring the company, formulating overall strategies, and approving business plans[91] Shareholder Engagement and Dividends - The company reported no dividends for the fiscal year 2022[119] - As of December 31, 2022, the company had no distributable reserves for shareholders, compared to zero in 2021[125] - Shareholders have the right to request a special general meeting if they hold at least 10% of the voting shares, which must be held within two months of the request[113] Environmental, Social, and Governance (ESG) Initiatives - The company has committed to environmental policies aimed at minimizing its impact on natural resources[123] - This is the third Environmental, Social, and Governance (ESG) report released by Zhongqing Environment Holdings Limited, detailing management policies and practices in ESG areas[200] Related Party Transactions - The group entered into significant related party transactions, including purchasing goods worth approximately RMB 491,000 from related parties, down from RMB 1.14 million in the previous year[169] - The board confirmed compliance with the Listing Rules Chapter 14A regarding continuing connected transactions, and a certified public accountant has been engaged to report on these transactions[179]

Financial Performance - For the fiscal year ended December 31, 2022, the total revenue was RMB 653,441 thousand, a decrease of 30.3% compared to RMB 936,595 thousand in the previous year[2] - The gross profit for the fiscal year was RMB 134,004 thousand, down 36.5% from RMB 211,230 thousand in the prior year[2] - The net loss for the year was RMB 106,004 thousand, compared to a profit of RMB 33,410 thousand in the previous year, representing a significant decline[3] - Revenue from landscaping services decreased to RMB 496,081,000 in 2022 from RMB 705,371,000 in 2021, representing a decline of approximately 29.6%[18] - Revenue from ecological restoration services also saw a decline, falling to RMB 72,779,000 in 2022 from RMB 150,607,000 in 2021, a decrease of about 51.7%[18] - Other income for 2022 was RMB 7,087 thousand, significantly lower than RMB 23,402 thousand in 2021, marking a decrease of around 69.7%[28] - The gross profit for the landscaping segment in 2022 was RMB 134,004 thousand, down from RMB 211,230 thousand in 2021, indicating a decrease of about 36.5%[26] - The ecological restoration segment generated a gross profit of RMB 15,438 thousand in 2022, compared to RMB 20,050 thousand in 2021, reflecting a decline of approximately 23.5%[24] - The company's revenue for the fiscal year 2022 was approximately RMB 653.4 million, a decrease of about 30.2% compared to the fiscal year 2021[61] - The company's gross profit declined by approximately 36.6% from RMB 211.2 million in FY2021 to RMB 134.0 million in FY2022, reflecting the overall revenue decrease[72] Assets and Liabilities - The company reported a decrease in total assets from RMB 1,993,922 thousand in 2021 to RMB 2,058,323 thousand in 2022, an increase of 3.2%[6] - The current assets net value decreased from RMB 255,724 thousand in 2021 to RMB 106,655 thousand in 2022, a decline of 58.3%[7] - The total equity attributable to shareholders decreased from RMB 594,627 thousand in 2021 to RMB 480,213 thousand in 2022, a drop of 19.3%[8] - The company's total liabilities were RMB 1,738.2 million, with current liabilities at RMB 943.4 million[57] - Trade receivables amounted to RMB 1,107,341,000 in 2022, compared to RMB 1,021,689,000 in 2021[46] - The company's trade payables decreased to RMB 785,538,000 in 2022 from RMB 943,446,000 in 2021[47] - The debt-to-equity ratio increased from 0.9 in 2021 to 1.4 in 2022 due to an increase in bank and other loans[94] - The net debt-to-equity ratio rose from 0.8 in 2021 to 1.1 in 2022, also due to increased borrowings[95] Cash Flow and Financing - The company incurred financing costs of RMB 40,311 thousand, compared to RMB 38,007 thousand in the previous year, an increase of 6.1%[2] - The company plans to improve cash flow by expediting invoicing and collection of trade receivables, actively participating in tenders, negotiating payment terms with suppliers, and reducing operating expenses[11] - The company is in discussions with banks to renew short-term bank loans and/or secure additional bank financing to address liquidity needs[12] - The group has received a commitment from its controlling shareholder, Zhongqing Investment, to provide necessary financial support, including the renewal of short-term loans[12] - The company has fully utilized its bank financing as of December 31, 2022, with no covenants breached[54] - Total borrowings increased from RMB 504.6 million in 2021 to RMB 663.2 million in 2022, with all bank financing utilized as of December 31, 2022[88] Operational Strategy and Future Plans - The company plans to focus on environmental restoration and related projects, aiming for market expansion in the coming fiscal year[9] - The company plans to focus on new infrastructure projects, urban renewal, and major infrastructure developments in 2023, aligning with government policies to boost economic growth[65] - The company aims to enhance its market presence and operational efficiency by pursuing a dual strategy of full-process consulting and general contracting[66] - The government plans to issue RMB 3.8 trillion in special bonds to support infrastructure projects in 2023, which is expected to benefit the company's business[65] - The company will continue to expand its business in smart city construction, smart tourism, and smart water management projects in the new infrastructure sector[66] Risk Management and Governance - The overall risk management plan focuses on minimizing potential adverse impacts on financial performance due to market unpredictability[101] - The company has adopted the corporate governance code as per the listing rules, except for the provision C.2.1 regarding the separation of roles between the Chairman and CEO[112] - The audit committee consists of three independent non-executive directors, who have reviewed the accounting standards and financial reporting matters for the fiscal year 2022[113] Employee and Operational Metrics - The group has a total of 555 employees as of December 31, 2022, with a compensation committee established to review the compensation policies[110] - The company submitted 403 bids in fiscal year 2022, an increase of 87 bids or approximately 27.5% from the previous year, with a bid success rate of 19.6%, up by 6 percentage points[61] - The total value of successful bids increased from approximately RMB 443.9 million in fiscal year 2021 to approximately RMB 1,053.2 million in fiscal year 2022[61] Taxation and Compliance - The company benefited from a preferential tax rate of 15% for certain subsidiaries in China, unchanged from 2021[35] - The current tax expense for 2022 was RMB 5,446 thousand, down from RMB 13,875 thousand in 2021, representing a decrease of approximately 60.7%[33] - Income tax expense decreased from RMB 3.6 million in FY2021 to a tax benefit of RMB -18.6 million in FY2022, mainly due to increased expected credit losses[79]

Project Bids and Contracts - In the first half of 2022, the company submitted 128 bids with a success rate of approximately 17.2%, resulting in new project contracts worth approximately RMB 160.2 million[9] - The company won the bid for the Changchun Shuangyang District Shixi River Phase III landscape and urban street greening project with a bid price of approximately RMB 111.6 million[9] - In July 2022, the company successfully won a public works project with a contract amount of approximately RMB 25.2 million, leveraging its existing second-level qualification for municipal public engineering contracting[11] - The successful bid rate for new contracts dropped to approximately 17.2% in the first half of 2022, with new contract amounts totaling RMB 160.2 million, compared to a 20.0% success rate and RMB 287.8 million in the first half of 2021[14] - The company maintains its bidding capabilities while actively pursuing external project contracts[9] Revenue and Financial Performance - The company's revenue decreased by approximately 37.2% from RMB 362.1 million in the first half of 2021 to RMB 227.3 million in the first half of 2022, primarily due to the impact of COVID-19 lockdowns in Changchun[14] - The landscaping segment's revenue fell by about 26.4% from RMB 265.2 million in the first half of 2021 to RMB 195.3 million in the first half of 2022, mainly due to reduced construction periods caused by lockdowns[17] - The ecological restoration segment's revenue plummeted by approximately 72.6% from RMB 90.0 million in the first half of 2021 to RMB 24.7 million in the first half of 2022, attributed to fewer new contracts and completed large projects[18] - The company's gross profit decreased by approximately 53.7% from RMB 81.2 million in the first half of 2021 to RMB 37.6 million in the first half of 2022, with the gross margin dropping from about 22.4% to 16.5%[20] - The company reported a net loss of RMB 41,524 thousand for the six months ended June 30, 2022, compared to a profit of RMB 16,487 thousand in the prior year[70] Cost Management and Expenses - Administrative expenses decreased by approximately 30.6% from RMB 32.0 million in the first half of 2021 to RMB 22.2 million in the first half of 2022, due to a reduction in employee numbers and decreased operational costs during lockdowns[24] - Financing costs increased by approximately 13.3% from RMB 17.3 million in H1 2021 to RMB 19.6 million in H1 2022, primarily due to an increase in bank and other loan amounts[25] - The company plans to improve cash flow by accelerating invoicing and collection of trade receivables, actively participating in tenders, negotiating payment terms with suppliers, and reducing operating expenses[80] Corporate Strategy and Future Plans - The company plans to expand its ecological and smart business lines and aims to establish branches in Beijing, Shandong, and Guangzhou[11] - The company aims to enhance its credit rating to AAA and apply for national and provincial design awards to improve its design qualifications[11] - The company is committed to becoming a leading brand in ecological environment construction and cultural tourism industry operations, focusing on a comprehensive transformation driven by "design + operation"[13] - The company plans to focus on market expansion and new product development to improve future performance[69] - The company is in discussions with banks to renew short-term loans and secure additional financing[80] Shareholder and Governance Information - The board of directors recommended not to declare an interim dividend for the first half of 2022[41] - The company has adopted the corporate governance code as per the listing rules, ensuring the separation of roles between the chairman and the CEO[66] - The company emphasizes the importance of good corporate governance elements in its management structure and internal controls[66] - Shareholders must submit written notices for nominations at least seven days before the relevant meeting date[58] Impacts of COVID-19 - The COVID-19 pandemic has caused project delays and a reduction in new contracts, impacting the company's operational and financial conditions[142] - The company has implemented emergency measures to mitigate the impact of COVID-19, including reassessing suppliers and subcontractors, and negotiating payment extensions to improve cash management[142] - As of June 30, 2022, the company recorded additional impairment losses on contract assets and trade receivables due to the pandemic's effect on clients' repayment capabilities[142] - The company remains optimistic about controlling the pandemic and is closely monitoring the situation to take necessary emergency measures[142] Investments and Acquisitions - Acquired 20% equity in Tianjin Nankang for approximately RMB 4.72 million and completed the acquisition of 97% equity in Jilin Province Jinghe Design Engineering Co., Ltd. in July 2022[32] - The company completed the acquisition of 97% equity in Jilin Jinghe Design in July 2022, which has since become a subsidiary[65] - The remaining 3% equity of Jilin Jinghe Design was acquired for approximately RMB 0.38 million, equivalent to 3% of the net asset value as of December 31, 2020[65] Market Presence and User Engagement - The company plans to expand its market presence by entering three new provinces in China by the end of 2022, aiming for a market share increase of 5%[147] - User data showed an increase in active users, with a total of 1.2 million new users acquired in the last quarter, representing a growth rate of 20%[147] - Customer satisfaction ratings improved, with a reported increase of 12% in positive feedback from users in the latest survey[147] Financial Position and Assets - Net current assets decreased by approximately 20.0% from RMB 248.3 million as of December 31, 2021, to RMB 198.7 million as of June 30, 2022, primarily due to a loss of RMB 41.5 million in H1 2022[29] - Cash and cash equivalents decreased from approximately RMB 46.7 million as of December 31, 2021, to RMB 29.8 million as of June 30, 2022[29] - The company's total equity attributable to equity shareholders was RMB 545,935 thousand, down from RMB 585,311 thousand at the end of 2021[74] - The company reported a significant increase in impairment losses on trade and other receivables and contract assets, amounting to RMB 46,269 thousand compared to RMB 13,399 thousand in the previous year[69] Compliance and Audit - The interim financial report for the six months ended June 30, 2022, was reviewed by KPMG and approved by the company's audit committee[68] - The financial report has been reviewed and found to comply with International Accounting Standard 34, with no significant issues identified[145]

Financial Performance - The company's revenue for the year ended December 31, 2021, was RMB 896,747,000, a decrease of 10.5% compared to RMB 1,001,427,000 in 2020[24] - Gross profit for the same period was RMB 191,798,000, down 19.6% from RMB 238,432,000 in the previous year[24] - Net profit for the year was RMB 28,382,000, representing a decline of 58.8% from RMB 68,941,000 in the prior year[24] - Total comprehensive income for the year was RMB 31,219,000, down 56.3% from RMB 71,381,000 in 2020[24] - Basic and diluted earnings per share were RMB 0.10, a decrease from RMB 0.31 in the previous year[24] - The company's profit before tax decreased by 68.4% to RMB 31,415,000 from RMB 99,352,000 in 2020[24] - The gross profit margin declined from approximately 23.8% in fiscal year 2020 to about 21.4% in fiscal year 2021[50] - The net profit margin fell from 6.9% in 2020 to 3.1% in 2021, primarily due to reduced earnings[78] Market Conditions - In the fiscal year 2021, the overall domestic construction market experienced a slowdown, with the GDP growth rate at 8.1%, declining to 4.9% in Q3 and further to 4.0% in Q4[26] - The landscaping industry faces short-term challenges due to stricter regulations on special bonds and a sluggish real estate market, leading to increased competition[28][30] - The overall profit margin in the construction industry has declined, and the number of construction enterprises continues to increase, intensifying market competition[27] - The landscaping market in China is projected to reach approximately RMB 596.9 billion by 2024, with a compound annual growth rate of about 2.9% from 2019 to 2024[27] Business Development - The company has made significant progress in developing markets outside Jilin Province, securing new projects in regions such as Liaoning, Inner Mongolia, Tianjin, Chongqing, and Sichuan[25] - The company plans to enhance its qualifications through acquisitions and upgrades, focusing on obtaining Class I qualifications for municipal public engineering construction and Class A qualifications for architectural design by 2022[25] - The company is actively developing new products based on smart infrastructure and cultural tourism projects, laying the foundation for future growth[25] - The company aims to enhance its core competitiveness through continuous technological innovation and expand its market presence in ecological governance[44] - The company plans to focus on new infrastructure projects, new urbanization, and major infrastructure developments as key market opportunities[43] Employee and Management - Employee costs for the fiscal year 2021 amounted to RMB 108.1 million, with a total of 469 employees as of December 31, 2021[37] - The group has focused on continuous professional development for employees, providing regular training to enhance skills and technical expertise[39] - The management team has extensive experience in the construction industry, with key executives holding over 20 years of management experience[99][100] - The company has a strong management team with diverse backgrounds in finance, engineering, and construction, enhancing its operational capabilities[103] - The company is committed to enhancing its corporate governance practices to comply with the corporate governance code[108] Risk Management - The group is committed to risk management, evaluating major risks such as investment and liquidity risks, with no significant internal control deficiencies reported[36] - The group faces various business risks, including economic conditions and changes in local government spending, which could impact demand for landscaping and ecological restoration projects[87] - The company has implemented policies to ensure sales are made to customers with appropriate credit records, limiting credit risk exposure[91] - The group regularly monitors its liquidity position to maintain sufficient cash reserves and comply with loan covenants[92] Corporate Governance - The company is committed to maintaining high governance standards with a diverse board composition, including independent directors with extensive industry experience[104] - The company has adopted the corporate governance code as per the listing rules, ensuring accountability and transparency in internal management practices[108] - The board includes members with significant experience in municipal engineering and environmental projects, aligning with the company's strategic focus[104] - The company has a structured internal control system to maintain high standards of corporate governance[108] Financial Position - Non-current assets increased by 4.7% to RMB 383,441,000 from RMB 366,237,000 in 2020[24] - Current assets rose by 10.0% to RMB 1,869,412,000 compared to RMB 1,699,903,000 in the previous year[24] - The company's net asset value increased by 22.9% to RMB 594,761,000 from RMB 483,810,000 in 2020[24] - The total debt as of December 31, 2021, was approximately RMB 504.6 million, an increase from RMB 480.0 million in 2020[76] - The current ratio improved from 1.1 in 2020 to 1.2 in 2021, indicating better short-term liquidity[79] Shareholder Engagement - The company aims to maintain transparency and continuous dialogue with shareholders through effective communication[130] - The company did not recommend the payment of dividends for the fiscal year 2021[137] - As of December 31, 2021, the company had no reserves available for distribution to shareholders, compared to zero reserves in 2020[143] Stock Option Plan - The stock option plan aims to provide incentives to contributors to the company and its subsidiaries[147] - The stock option plan is effective from the date of shareholder approval until the tenth anniversary of the listing date, allowing for a maximum of 27,500,000 shares to be issued, which is 10% of the total shares issued post-listing[150][161] - The plan allows for the granting of stock options to full-time or part-time employees, consultants, and other qualified participants as determined by the board[147] - The company has not granted any stock options under the plan since its establishment[148]

Company Information The report provides fundamental company information, including details on board members, committees, auditors, legal counsel, principal bankers, and share registrar - The report provides fundamental company information, including details on board members, committee compositions, auditors, legal advisors, principal bankers, and share registrar[4](index=4&type=chunk)[6](index=6&type=chunk) Management Discussion and Analysis [Business Review and Outlook](index=5&type=section&id=Business%20Review%20and%20Outlook) In H1 2021, group revenue slightly increased by **1.2% to RMB 362.1 million**, driven by landscape and ecological restoration, with new qualifications and major project wins increasing bid value by **RMB 268.8 million**, and future growth expected from national environmental policies and expanded qualifications [Business Review](index=5&type=section&id=Business%20Review) H1 2021 revenue reached **RMB 362.1 million**, a **1.2% increase**, with landscape and ecological restoration as primary contributors, alongside securing three new qualifications and winning major projects that boosted total bid value by **RMB 268.8 million** H1 2021 Business Overview | Metric | Value | | :--- | :--- | | Total Revenue | Approximately RMB 362.1 million | | Revenue Y-o-Y Growth | Approximately 1.2% | | Landscape Business Revenue Share | 73.2% | | Ecological Restoration Business Revenue Share | 24.8% | | Bid Value Y-o-Y Growth | Approximately RMB 268.8 million | - The Group obtained three new enterprise qualifications in building construction, hydraulic and hydropower engineering, and urban road lighting engineering during the period, which will facilitate future business undertakings[7](index=7&type=chunk) - The Group successfully bid for several major projects, including Changchun Beihu Science and Technology Development Zone Landscape Greening Project (**RMB 107.6 million**), Lianhuashan Road Greening Project (**RMB 113.6 million**), and Hangzhou Huangjinfan Ecological Landscape Project (**RMB 36 million**)[7](index=7&type=chunk) [Risk Management](index=5&type=section&id=Risk%20Management) Management assists the Board in assessing significant risks, including investment, interest rate, and liquidity, and implements corresponding risk management and internal control measures, with no material internal control deficiencies in financial reporting during the period - The Group had no material internal control deficiencies in financial reporting during H1 2021[8](index=8&type=chunk) [Outlook](index=6&type=section&id=Outlook) Benefiting from national policies like the '14th Five-Year Plan' and carbon neutrality goals, the ecological and environmental protection sector offers broad prospects, with the Group planning to acquire Grade I municipal public works construction qualification to expand its business scope and enhance competitiveness - The national '14th Five-Year Plan' and carbon peak and neutrality targets provide a favorable policy environment for the Group[10](index=10&type=chunk) - The Group plans to acquire Grade I municipal public works construction general contracting qualification in H2, and considers Grade II highway engineering construction general contracting qualification to expand municipal and highway engineering services[10](index=10&type=chunk) [Financial Review](index=7&type=section&id=Financial%20Review) In H1 2021, revenue slightly increased by **1.2% to RMB 362.1 million**, but gross profit decreased by **7.2% to RMB 81.2 million**, with gross margin falling to **22.4%**; income tax expense significantly reduced by **54.3%** due to high-tech enterprise status, while net current assets grew by **50.5%** and gearing ratio decreased to **0.9** [Operating Results](index=7&type=section&id=Operating%20Results) H1 2021 revenue was **RMB 362.1 million**, up **1.2%**, with landscape revenue growing **42.2%** while ecological restoration and other businesses declined; gross profit fell **7.2% to RMB 81.2 million**, with gross margin at **22.4%**, primarily due to reduced contribution from high-margin 'other' businesses, and income tax decreased **54.3%** due to tax incentives H1 2021 Segment Revenue (RMB million) | Business Segment | H1 2021 | H1 2020 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Landscape | 265.2 | 186.5 | +42.2% | | Ecological Restoration | 90.0 | 144.8 | -37.8% | | Other | 6.9 | 26.6 | -74.1% | | **Total** | **362.1** | **357.9** | **+1.2%** | - Gross profit decreased by **7.2%** from **RMB 87.5 million** to **RMB 81.2 million**, with gross margin falling from **24.5%** to **22.4%**, primarily due to reduced contribution from higher-margin 'other' businesses[17](index=17&type=chunk) - Income tax expense decreased by **54.3%** from **RMB 7 million** to **RMB 3.2 million**, mainly because subsidiary Zhongbang Landscape was recognized as a high-tech enterprise, enjoying a **15%** preferential tax rate[24](index=24&type=chunk) [Assets and Liabilities](index=10&type=section&id=Assets%20and%20Liabilities) As of June 30, 2021, net current assets increased by **50.5% to RMB 265 million**, driven by listing proceeds and profitability; total borrowings were approximately **RMB 518 million**, with the gearing ratio decreasing from **1.0 to 0.9**, and significant financial guarantees provided for PPP projects of associates and joint ventures resulted in high contingent liabilities - Net current assets increased by **50.5%** from **RMB 176 million** at year-end 2020 to **RMB 265 million**[26](index=26&type=chunk) - The gearing ratio (bank and other borrowings/total equity) decreased from **1.0** at year-end 2020 to **0.9**[28](index=28&type=chunk) - The Group provided guarantees for bank loans of joint venture Tianjun Tourism (loan balance **RMB 375 million**) and associate Changchun Xianbang (loan balance **RMB 224 million**)[30](index=30&type=chunk)[31](index=31&type=chunk) [Investments and Financing](index=10&type=section&id=Investments%20and%20Financing) During the reporting period, the Group had no significant acquisitions, disposals, or major investments, but entered into a forward foreign exchange contract of approximately **USD 7.59 million** in July 2021 to hedge foreign exchange risk from USD loans - The Group had no significant acquisitions, disposals, or major investments during H1 2021[29](index=29&type=chunk) - To mitigate exchange rate risk from USD loans, the Group entered into a RMB/USD forward foreign exchange contract totaling approximately **USD 7.59 million** in July 2021[33](index=33&type=chunk) [Use of Proceeds from Listing](index=11&type=section&id=Use%20of%20Proceeds%20from%20Listing) The company listed on January 6, 2021, with net proceeds of approximately **HKD 54.7 million**; as of the reporting date, **HKD 17.8 million** was utilized for regional design offices, bank loan repayment, and working capital, with the remaining **HKD 36.9 million** expected to be used as planned by end of 2022 Use of Proceeds from Listing (HKD million) | Purpose | Allocated Amount | Amount Utilized | Unutilized Amount | | :--- | :--- | :--- | :--- | | Establishment of regional design offices | 8.1 | 3.5 | 4.6 | | Pre-construction costs for Changchun Zoo project | 13.0 | 1.8 | 11.2 | | Investment in Ulanhot Tianjiao Tianjun | 14.3 | — | 14.3 | | Purchase of ERP system | 4.0 | 0.1 | 3.9 | | Repayment of bank loans | 9.8 | 9.8 | — | | General working capital | 5.5 | 2.6 | 2.9 | | **Total** | **54.7** | **17.8** | **36.9** | Other Information [Dividends, Employees and Remuneration Policy](index=12&type=section&id=Dividends%2C%20Employees%20and%20Remuneration%20Policy) The Board recommended no interim dividend for 2021; as of June 30, 2021, the Group had **504 employees** and established a systematic remuneration management policy and welfare system, with a remuneration committee reviewing related policies - The Directors recommended no interim dividend for H1 2021[37](index=37&type=chunk) - As of June 30, 2021, the Group had **504 employees**[38](index=38&type=chunk) [Directors' and Major Shareholders' Interests](index=13&type=section&id=Directors%27%20and%20Major%20Shareholders%27%20Interests) The report details the interests and short positions of directors, chief executives, and major shareholders in the company and its associated corporations as of June 30, 2021, with controlling shareholder Zhongqing International holding **65.89%** and Zhongbang International holding **5.11%** of the shares Major Shareholder Holdings | Shareholder Name | Nature of Interest | Number of Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Zhongqing International | Beneficial owner | 181,202,166 | 65.89% | | Zhongbang International | Beneficial owner | 14,054,104 | 5.11% | [Corporate Governance and Compliance](index=15&type=section&id=Corporate%20Governance%20and%20Compliance) The company maintained sufficient public float and disclosed limited potential competing businesses; a deviation from the Corporate Governance Code exists with the Chairman and CEO roles combined, and post-reporting period, related party transactions and company secretary change occurred, with the interim financial report reviewed by KPMG - The roles of Chairman and Chief Executive Officer are held concurrently by Mr. Liu Haitao, which deviates from Code Provision A.2.1 of the Corporate Governance Code[62](index=62&type=chunk) - Post-reporting event: To hedge the currency risk of USD loans, the Group entered into a forward foreign exchange contract with China Everbright Bank on July 30, 2021, with a maximum amount of **USD 7,592,263.02**[59](index=59&type=chunk) - The 2021 interim financial report was not audited but was reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[63](index=63&type=chunk) Condensed Consolidated Financial Statements [Consolidated Statement of Profit or Loss](index=19&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2021, revenue was **RMB 362.1 million**, a slight increase, but gross profit decreased to **RMB 81.2 million**; profit for the period was **RMB 16.49 million**, a **22.6%** decrease from **RMB 21.32 million** in the prior year, with profit attributable to equity holders at **RMB 16.33 million** Consolidated Statement of Profit or Loss Summary (RMB thousand) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Revenue | 362,073 | 357,885 | | Gross Profit | 81,197 | 87,505 | | Operating Profit | 31,789 | 43,084 | | Profit Before Tax | 19,681 | 28,276 | | **Profit for the Period** | **16,487** | **21,315** | | Profit attributable to equity holders of the Company | 16,331 | 21,189 | [Consolidated Statement of Financial Position](index=21&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2021, total assets were **RMB 2.107 billion**, total liabilities **RMB 1.527 billion**, and total equity **RMB 580 million**, representing a **20%** increase from year-end 2020, primarily due to listing proceeds and period profit, with net current assets at **RMB 265 million** Consolidated Statement of Financial Position Summary (RMB thousand) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Non-current Assets | 377,746 | 366,237 | | Current Assets | 1,729,405 | 1,699,903 | | **Total Assets** | **2,107,151** | **2,066,140** | | Current Liabilities | 1,464,022 | 1,523,553 | | Non-current Liabilities | 62,661 | 58,777 | | **Total Liabilities** | **1,526,683** | **1,582,330** | | **Total Equity** | **580,468** | **483,810** | [Condensed Consolidated Statement of Cash Flows](index=25&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) In H1 2021, net cash outflow from operating activities was **RMB 96.34 million**, an increase from the prior year; net cash inflow from investing activities was **RMB 2.67 million**, and from financing activities was **RMB 53.35 million**, mainly from new loans and listing proceeds, resulting in period-end cash and cash equivalents of **RMB 104 million**, a decrease of **RMB 40.31 million** from year-start Condensed Consolidated Statement of Cash Flows Summary (RMB thousand) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | (96,339) | (73,989) | | Net cash generated from investing activities | 2,674 | 37,145 | | Net cash generated from financing activities | 53,354 | 165 | | **Net decrease in cash and cash equivalents** | **(40,311)** | **(36,679)** | | Cash and cash equivalents at beginning of period | 143,997 | 73,615 | | **Cash and cash equivalents at end of period** | **103,681** | **36,941** | Notes to the Financial Statements [Note 4 Revenue and Segment Reporting](index=27&type=section&id=Note%204%20Revenue%20and%20Segment%20Reporting) The Group operates in three segments: landscape, ecological restoration, and other; in H1 2021, the landscape segment contributed most of the gross profit increase, reaching **RMB 58 million**, while ecological restoration gross profit was **RMB 21.37 million**, and the 'other' segment's gross profit significantly declined to **RMB 1.84 million**, with most revenue (**RMB 361 million**) recognized over time H1 2021 Segment Gross Profit (RMB thousand) | Segment | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Landscape | 57,989 | 34,999 | | Ecological Restoration | 21,367 | 34,446 | | Other | 1,841 | 18,060 | | **Total** | **81,197** | **87,505** | [Note 11 Trade and Bills Receivables](index=36&type=section&id=Note%2011%20Trade%20and%20Bills%20Receivables) As of June 30, 2021, total trade and bills receivables (net of loss allowance) significantly increased to **RMB 868 million** from **RMB 697 million** at year-start; receivables within one year accounted for approximately **57%**, while those over one year were **43%**, indicating collection pressure Trade and Bills Receivables Aging Analysis (RMB thousand) | Aging | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Within 1 year | 494,992 | 340,653 | | 1 to 2 years | 163,422 | 141,379 | | Over 2 years | 209,302 | 214,970 | | **Total** | **867,716** | **697,002** | [Note 15 Bank and Other Borrowings](index=40&type=section&id=Note%2015%20Bank%20and%20Other%20Borrowings) As of June 30, 2021, total bank and other borrowings were **RMB 518 million**, with **RMB 468 million** due within one year; most loans were guaranteed by third parties or secured by trade receivables and contract assets, and unused bank facilities totaled **RMB 143 million** at period-end - Total bank and other borrowings amounted to **RMB 517.6 million**, of which **RMB 467.6 million** is repayable within one year[113](index=113&type=chunk)[115](index=115&type=chunk) - The Group's bank borrowings are primarily guaranteed by third parties (some with counter-guarantees from related parties) and secured by trade receivables and contract assets[113](index=113&type=chunk)[116](index=116&type=chunk) [Note 21 Significant Related Party Transactions](index=47&type=section&id=Note%2021%20Significant%20Related%20Party%20Transactions) During the period, the Group engaged in multiple transactions with related parties, including the controlling shareholder Zhongqing Investment and its associates, joint ventures, and associates; key transactions involved providing construction services to and obtaining guarantees from related parties, with significant outstanding balances indicating close business ties - The Group provided construction services generating **RMB 4.21 million** in revenue from joint ventures and **RMB 7.19 million** from associates[139](index=139&type=chunk)[140](index=140&type=chunk) - As of period-end, contract assets and trade receivables due from Zhongqing Investment and its associates totaled approximately **RMB 184 million**[143](index=143&type=chunk) Review Report [KPMG Review Report](index=52&type=section&id=KPMG%20Review%20Report) KPMG reviewed the interim financial report in accordance with Hong Kong Standard on Review Engagements, and based on the review, found no matters leading them to believe the report was not prepared in all material respects in accordance with IAS 34 'Interim Financial Reporting' - KPMG issued an unqualified review report on the interim financial report[149](index=149&type=chunk)

[Company Information](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%B5%84%E6%96%99) This section provides fundamental company details including board members, committee structures, auditors, legal advisors, principal bankers, registered office, and principal place of business - This section provides fundamental company details including board members, committee structures, auditors, legal advisors, principal bankers, registered office, and principal place of business. The company was listed on the Hong Kong Stock Exchange on January 6, 2021, stock code **1855**[5](index=5&type=chunk)[7](index=7&type=chunk) [Financial Highlights](index=5&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) The company achieved robust growth in FY2020, with revenue increasing by 11.6% to RMB1.001 billion and profit for the year surging by 39.4% to RMB68.94 million - In FY2020, the company achieved robust growth, with revenue increasing by **11.6%** to **RMB1.001 billion**, and profit for the year surging by **39.4%** to **RMB68.94 million**. Net current assets grew by **73.9%**, and net assets increased by **18.8%**[8](index=8&type=chunk) 2020 Financial Highlights (Compared to 2019) | Metric | 2020 (RMB Thousand) | 2019 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | **Revenue** | 1,001,427 | 897,486 | 11.6% | | **Gross Profit** | 238,432 | 233,371 | 2.2% | | **Profit Before Tax** | 99,352 | 79,374 | 25.2% | | **Profit for the Year** | 68,941 | 49,453 | 39.4% | | **Profit for the Year Attributable to Equity Holders of the Company** | 68,505 | 49,496 | 38.4% | | **Earnings Per Share (RMB)** | 0.31 | 0.23 | 34.8% | | **Total Assets** | 2,066,140 | 1,700,113 | 21.5% | | **Net Assets** | 483,810 | 407,429 | 18.8% | [Chairman's Statement](index=6&type=section&id=%E4%B8%BB%E5%B8%AD%E5%A0%B1%E5%91%8A) Chairman Mr. Liu Haitao reported robust growth and successful listing in 2020 despite macro challenges, with strategic national expansion and social responsibility initiatives - Chairman Mr. Liu Haitao noted that despite complex macro challenges like the COVID-19 pandemic in 2020, the Group achieved robust growth and successfully listed. The Group secured new projects in Xiong'an New Area and Fujian, marking strategic progress in its national layout. The company received the 'National Quality Engineering Award' and actively participated in social responsibility, aiding in the construction of Tonghua Fangcang Hospital[10](index=10&type=chunk) - Looking ahead to 2021, the Group will focus on expanding its technological expertise in environmental protection and ecological governance through technological innovation, adhere to its national market strategic layout, and optimize its management system to enhance efficiency, striving for better operating performance to reward shareholders[10](index=10&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E5%8F%8A%E5%88%86%E6%9E%90) This section provides an overview of the company's operational and financial performance, industry trends, and future outlook [Industry Review](index=7&type=section&id=%E8%A1%8C%E6%A5%AD%E5%9B%9E%E9%A1%A7) China's landscape industry benefits from ongoing urbanization and government greening policies, with stable market growth expected despite short-term deleveraging pressures on local governments - Ongoing urbanization is a primary growth driver for China's landscape industry, with urbanization rate projected to reach approximately **70% by 2035**[12](index=12&type=chunk) - Government policies are another major driver, including urban greening targets set in the '13th Five-Year Plan' and supportive policies from local governments in the Northeast provinces[12](index=12&type=chunk)[13](index=13&type=chunk) - The COVID-19 pandemic had no significant impact on the landscape market in 2020, with most projects only delayed by **15 to 30 days**, and the State Council issued directives to ensure full-year greening targets were met[15](index=15&type=chunk) [Business Review](index=8&type=section&id=%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) In 2020, the Group's total revenue grew by 11.6% to RMB1.001 billion, driven by landscape (62.0%) and ecological restoration (30.2%) segments, with significant increases in successful bids and national project expansion 2020 Business Revenue Composition | Business Segment | Revenue Contribution | | :--- | :--- | | Landscape | 62.0% | | Ecological Restoration | 30.2% | | Others | 7.8% | - The Group achieved significant growth in both the number and total value of successful bids in 2020, with the number of successful bids increasing from **22 to 53**, and the total contract value from approximately **RMB594 million to RMB1.539 billion**[16](index=16&type=chunk) - The Group made breakthroughs in its national business layout, successfully bidding for projects in Xiong'an, Fujian, and Chongqing, expanding its winning bid regions[16](index=16&type=chunk) [Financial Review](index=12&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) In 2020, the Group's financial performance was stable, with total revenue up 11.6% to RMB1.001 billion, though gross profit margin declined due to new market expansion [Revenue Analysis](index=12&type=section&id=%E6%94%B6%E5%85%A5%E5%88%86%E6%9E%90) Total revenue increased by 11.6% to RMB1.001 billion, primarily driven by a 41.2% growth in the landscape segment to RMB621.2 million, while ecological restoration revenue decreased Revenue and Project Quantity Changes by Business Segment | Business Segment | 2020 Revenue (RMB Thousand) | 2019 Revenue (RMB Thousand) | Revenue Change (%) | | :--- | :--- | :--- | :--- | | Landscape | 621,208 | 439,784 | 41.2% | | Ecological Restoration | 302,737 | 402,578 | -24.8% | | Others | 77,482 | 55,124 | 40.6% | | **Total** | **1,001,427** | **897,486** | **11.6%** | [Cost, Gross Profit, and Expense Analysis](index=13&type=section&id=%E6%88%90%E6%9C%AC%E3%80%81%E6%AF%9B%E5%88%A9%E5%8F%8A%E9%96%8B%E6%94%AF%E5%88%86%E6%9E%90) Sales cost increased by 14.9% to RMB763 million, gross profit slightly rose by 2.2% to RMB238 million, but gross profit margin decreased to 23.8% due to lower-margin projects in new markets - Gross profit margin decreased from **26.0% to 23.8%**, primarily due to bidding on some projects with lower profit margins to expand into new markets and regions[31](index=31&type=chunk) - Administrative expenses increased by **9.0%** year-on-year, mainly due to increased listing fees and intermediary service fees for the Group's listing[35](index=35&type=chunk) - Finance costs decreased by **7.5%** year-on-year, primarily due to a reduction in the average loan balance compared to 2019[36](index=36&type=chunk) [Balance Sheet Analysis](index=16&type=section&id=%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E7%8A%B6%E5%86%B5%E5%88%86%E6%9E%90) As of end-2020, the Group's net current assets significantly increased by 73.9% to RMB176 million, with contract assets and trade receivables growing, while contract liabilities surged due to increased project prepayments - Net current assets increased from **RMB101 million to RMB176 million**, a **73.9%** increase, primarily due to the increased number and scale of operating projects[42](index=42&type=chunk) - Contract assets increased from **RMB631 million to RMB813 million**, a **28.9%** increase, consistent with revenue growth. Contract liabilities increased from **RMB66.6 million to RMB191 million**, a **187.4%** increase, mainly due to increased project prepayments[44](index=44&type=chunk) Receivables and Payables Turnover Days | Metric | 2020 (Days) | 2019 (Days) | | :--- | :--- | :--- | | Average Trade Receivables Turnover Days | 249.9 | 249.3 | | Average Contract Assets and Trade Receivables Turnover Days | 550.5 | 520.1 | | Average Trade Payables and Bills Payable Turnover Days | 288.5 | 264.9 | [Key Financial Ratios](index=23&type=section&id=%E4%B8%BB%E8%A6%81%E8%B2%A1%E5%8B%99%E6%AF%94%E7%8E%87) In 2020, the Group's profitability improved, with return on equity rising from 13.4% to 15.6%, and solvency indicators remained stable, showing optimized financial structure and enhanced debt repayment capability Key Financial Ratios Changes | Ratio | 2020 | 2019 | | :--- | :--- | :--- | | Gross Profit Margin (%) | 23.8 | 26.0 | | Net Profit Margin (%) | 6.9 | 5.5 | | Return on Equity (%) | 15.6 | 13.4 | | Return on Total Assets (%) | 3.7 | 3.1 | | Current Ratio | 1.1 | 1.1 | | Gearing Ratio | 1.0 | 1.2 | | Net Debt to Equity Ratio | 0.7 | 1.0 | [Prospects](index=11&type=section&id=%E5%89%8D%E6%99%AF) Despite global economic uncertainties, the Group achieved growth in 2020, demonstrating robust operations. In 2021, it will focus on technological innovation, national market expansion, and talent development to enhance enterprise value - The Group plans to expand its technological expertise in environmental protection and ecological governance through technological innovation[24](index=24&type=chunk) - Adhere to the 'going out' strategy to further improve its national market layout and enhance corporate efficiency[24](index=24&type=chunk) [Use of Proceeds from Listing](index=28&type=section&id=%E4%B8%8A%E5%B8%82%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94) The company listed on January 6, 2021, with net proceeds of approximately HKD54.7 million. As of the reporting date, HKD11.9 million has been utilized, primarily for loan repayment, establishing design offices, and supplementing working capital Use of Net Proceeds from Listing and Utilization (As of Reporting Date) | Use of Proceeds | Allocated (HKD Million) | Utilized (HKD Million) | Unutilized (HKD Million) | | :--- | :--- | :--- | :--- | | Establish regional design offices in Beijing, Shanghai, and Chongqing | 8.1 | 1.0 | 7.1 | | Pre-construction costs for Changchun Zoo project | 13.0 | — | 13.0 | | Investment in Ulanhot Tianjiao Tianjun Tourism Development Co., Ltd. | 14.3 | — | 14.3 | | Acquisition of a centralized ERP system | 4.0 | — | 4.0 | | Repayment of bank loans | 9.8 | 9.8 | — | | General working capital | 5.5 | 1.1 | 4.4 | | **Total** | **54.7** | **11.9** | **42.8** | [Directors and Senior Management](index=29&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E5%B1%A4) This section details the biographies of the company's board members and senior management team, highlighting their extensive experience in various fields - This section details the biographies of the company's board members and senior management team. The Board comprises three executive directors, three non-executive directors, and three independent non-executive directors, possessing extensive experience in architecture, finance, and engineering. Senior management also has years of industry project management and technology R&D experience[81](index=81&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) [Corporate Governance Report](index=35&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%A0%B1%E5%91%8A) The company maintains high corporate governance standards, adhering to HKEX's Corporate Governance Code, with a balanced board structure and established committees for oversight [Corporate Governance Practices](index=35&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F) The company is committed to high corporate governance standards, adopting the HKEX Corporate Governance Code, with a balanced board and established committees ensuring effective oversight - The roles of Chairman and Chief Executive Officer are combined and held by Mr. Liu Haitao, an arrangement the Board believes has no significant impact on the company's corporate governance[93](index=93&type=chunk)[97](index=97&type=chunk) - The Board comprises nine directors, including three executive directors, three non-executive directors, and three independent non-executive directors, ensuring a high degree of Board independence[96](index=96&type=chunk) [Board Committees](index=39&type=section&id=%E8%91%A3%E4%BA%8B%E5%A7%94%E5%93%A1%E6%9C%83) The company has established Audit, Remuneration, and Nomination Committees, all chaired by independent non-executive directors, to oversee key areas like financial reporting, risk management, and director nominations - The Audit Committee comprises three independent non-executive directors, with Mr. Li Guodong as Chairman, responsible for overseeing financial reporting, risk management, and internal control systems[105](index=105&type=chunk) - The Remuneration Committee comprises three independent non-executive directors, with Mr. Yin Jun as Chairman, responsible for monitoring the remuneration and benefits of directors and senior management[106](index=106&type=chunk) - The Nomination Committee comprises three independent non-executive directors, with Mr. Gao Xiangnong as Chairman, responsible for leading the director appointment process and reviewing Board composition[109](index=109&type=chunk) [Directors' Report](index=45&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%A0%B1%E5%91%8A) This report covers the company's principal activities, dividend policy, share option scheme, and ongoing connected transactions [Principal Activities and Dividends](index=45&type=section&id=%E4%B8%BB%E8%A6%81%E6%A5%AD%E5%8B%99%E8%88%87%E8%82%A1%E6%81%AF) The company primarily engages in landscape, ecological restoration, and related projects, completed a group reorganization for listing in 2020, and the Board does not recommend a final dividend for FY2020 - The company was listed on the Main Board of the Stock Exchange on **January 6, 2021**, having completed a group reorganization prior to listing[127](index=127&type=chunk) - The Board does not recommend the payment of any final dividend for the financial year 2020[129](index=129&type=chunk) [Share Option Scheme](index=48&type=section&id=%E8%B3%BC%E8%82%A1%E6%AC%8A%E8%A8%88%E5%8A%83) The company adopted a share option scheme on December 14, 2020, valid for ten years, to incentivize eligible participants, with a maximum of 27.5 million shares (10% of issued shares post-listing) available for grant - The Share Option Scheme was adopted on **December 14, 2020**, with a validity period of **10 years**[138](index=138&type=chunk)[142](index=142&type=chunk) - The maximum number of shares subject to options that may be granted under the scheme is **27,500,000 shares**, representing **10%** of the total issued shares upon listing[153](index=153&type=chunk) - The exercise price shall not be less than the highest of the closing price of the shares on the offer date, the average closing price for the five trading days immediately preceding the offer date, and the nominal value of the shares[152](index=152&type=chunk) [Continuing Connected Transactions](index=59&type=section&id=%E6%8C%81%E7%BA%8C%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93) Post-listing, continuing connected transactions primarily involve business dealings with related party Zhongqing Investment Group, including equipment use, infrastructure construction, technical consulting, property leasing, and engineering services, all under framework agreements with annual caps - The Group entered into multiple framework agreements with related party Zhongqing Investment, covering equipment usage, engineering services, technical consulting, property leasing, and more, with annual caps set until **2022**[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) - Both the Directors and the Auditor have reviewed and confirmed that the terms of these continuing connected transactions are fair and reasonable, in the overall interest of the company and its shareholders, and comply with the Listing Rules[189](index=189&type=chunk) [Environmental, Social and Governance Report](index=67&type=section&id=%E7%92%B0%E5%A2%83%E3%80%81%E7%A4%BE%E6%9C%83%E5%8F%8A%E7%AE%A1%E6%B2%BB%E5%A0%B1%E5%91%8A) This report details the Group's commitment to environmental protection, employee welfare, ethical operations, and community engagement, adhering to relevant regulations and best practices [Environmental Protection](index=69&type=section&id=%E7%92%B0%E5%A2%83%E4%BF%9D%E8%AD%B7) The Group adheres to environmental regulations, implementing a comprehensive system to control construction pollution, reduce emissions, and conserve resources, while actively participating in ecological restoration projects - The Group has established an environmental protection system to comprehensively control construction pollution, with measures including vehicle washing, material covering, and wastewater treatment and reuse[218](index=218&type=chunk) 2020 Environmental Key Performance Indicators | Metric Name | Unit | 2020 Data | | :--- | :--- | :--- | | Total Greenhouse Gas Emissions | tonnes of CO2 equivalent | 525.71 | | Total Non-Hazardous Waste Generated | kilograms | 184,780.00 | | Total Electricity Consumption | kWh | 753,617.43 | | Total Water Consumption | cubic meters | 46,124.13 | - The Group actively participates in ecological restoration projects, such as the Dongxinkai River Basin project, by constructing estuary parks and Changjia Park, to restore aquatic ecological environments and enhance landscape aesthetics[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) [Employment and Labor Practices](index=74&type=section&id=%E5%83%B1%E5%82%AD%E5%8F%8A%E5%8B%9E%E5%B7%A5%E5%B8%B8%E8%A6%8F) The Group adheres to labor laws, prohibits child and forced labor, and provides competitive compensation, comprehensive benefits, and diverse training opportunities, prioritizing employee health and safety - The Group provides comprehensive employee benefits, including statutory social insurance, high-temperature allowances, health check-ups, holiday benefits, and heating subsidies[230](index=230&type=chunk) - A multi-tiered training system has been established, with various training programs organized in 2020, including professional skills, new employee onboarding, and leadership development for middle and senior management[232](index=232&type=chunk) - Strictly adheres to labor standards, prohibits child and forced labor, and ensures compliance through rigorous recruitment and review processes[235](index=235&type=chunk) [Operating Practices](index=76&type=section&id=%E7%87%9F%E9%81%8B%E6%85%A3%E4%BE%8B) The Group emphasizes supply chain management, product quality, information security, and intellectual property protection, while fostering an integrity culture with anti-corruption measures and reporting channels - Conducts dynamic evaluation and tiered management of suppliers, blacklisting those involved in bid rigging, collusion, or bribery[236](index=236&type=chunk) - Emphasizes intellectual property protection, having accumulated **91 intellectual property rights** by the end of 2020, including **3 invention patents** and **18 software copyrights**[240](index=240&type=chunk) - Established an anti-corruption system, stipulating 'six strict prohibitions,' and providing four reporting channels: mail, in-person visits, telephone, and online[245](index=245&type=chunk) [Community Investment](index=80&type=section&id=%E7%A4%BE%E5%8D%80%E6%8A%95%E8%B3%87) The Group actively fulfills its social responsibilities by engaging in community investment and public welfare, notably contributing nearly RMB1 million and assisting in the construction of Tonghua Fangcang Hospital during the 2020 COVID-19 pandemic - During the 2020 pandemic, the Group donated nearly **RMB1 million** in funds and supplies to Xinjiang, Inner Mongolia, Jilin, and other regions[247](index=247&type=chunk) - During the severe epidemic in Jilin Province, the Group immediately engaged in the construction of Tonghua Fangcang Hospital to support epidemic prevention and control[248](index=248&type=chunk) [Independent Auditor's Report](index=85&type=section&id=%E7%8D%A8%E7%AB%8B%E6%A0%B8%E6%95%B8%E5%B8%AB%E5%A0%B1%E5%91%8A) KPMG issued an unqualified opinion on the company's 2020 consolidated financial statements, affirming their fair presentation and compliance with IFRS and Hong Kong Companies Ordinance - KPMG, the auditor, issued an unqualified opinion on the company's 2020 consolidated financial statements, affirming that they fairly and accurately reflect the Group's financial position and operating results, and have been properly prepared in compliance with International Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance[253](index=253&type=chunk) - The report identified two key audit matters: - **Revenue recognition based on percentage of completion**: This is a key audit matter due to the high degree of management judgment involved in determining transaction prices and total costs[255](index=255&type=chunk)[256](index=256&type=chunk) - **Expected credit loss provision for contract assets and trade receivables**: This is a key audit matter due to the significant year-end balances and the subjective nature of the recognition process[258](index=258&type=chunk) [Consolidated Financial Statements](index=92&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) This section presents the Group's complete audited consolidated financial statements for the year ended December 31, 2020, including the income statement, comprehensive income statement, balance sheet, statement of changes in equity, cash flow statement, and detailed notes - This section contains the Group's complete audited consolidated financial statements for the year ended December 31, 2020, including the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows, and detailed notes to the financial statements[267](index=267&type=chunk)[268](index=268&type=chunk)[272](index=272&type=chunk) [Four-Year Financial Summary](index=180&type=section&id=%E5%9B%9B%E5%B9%B4%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) This section provides a four-year financial overview of the Group's performance and financial position from 2017 to 2020, highlighting key trends in revenue, profit, assets, and liabilities 2017-2020 Performance Summary (RMB Thousand) | Metric | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,001,427 | 897,486 | 809,444 | 655,496 | | Profit Before Tax | 99,352 | 79,374 | 97,954 | 72,362 | | Profit Attributable to Equity Holders of the Company | 68,505 | 49,496 | 70,413 | 52,627 | 2017-2020 Assets, Liabilities, and Equity Summary (RMB Thousand) | Metric | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | | Total Assets | 2,066,140 | 1,700,113 | 1,488,108 | 1,177,137 | | Total Liabilities | 1,582,330 | 1,292,684 | 1,148,677 | 906,224 | | Net Assets | 483,810 | 407,429 | 339,431 | 270,913 |