[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 |