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 |