Financial Performance - The company's consolidated revenue for the first half of 2022 was RMB 1,024.0 million, an increase of approximately 6.6% compared to RMB 960.5 million in the same period last year[14]. - Revenue from the marine construction segment was RMB 240.3 million, while the municipal engineering segment generated RMB 783.7 million[10]. - The gross profit for the main business was RMB 80.9 million, a decrease of 8.5% from RMB 88.4 million in the same period last year[17]. - Operating profit for the first half of 2022 was RMB 29.2 million, down 22.1% from RMB 37.5 million in the previous year[18]. - Net profit attributable to shareholders for the period was RMB 15,328 thousand, down from RMB 22,710 thousand in the previous year, a decrease of around 32.5%[62]. - Basic and diluted earnings per share for the period were both RMB 1.87, compared to RMB 2.95 in the same period last year, a decline of approximately 36.6%[62]. - The total comprehensive income for the six months ended June 30, 2022, was RMB 45,128 thousand, with a profit of RMB 47,062 thousand during the period[69]. - The company reported a net profit of RMB 15,301 thousand for the six-month period[141]. Costs and Expenses - The cost of sales for the first half of 2022 was RMB 943.1 million, an increase of 8.1% from RMB 872.1 million in the previous year[17]. - Administrative expenses increased by 10.7% to RMB 52.8 million, compared to RMB 47.7 million in the previous year, primarily due to more construction projects and the recurring impact of COVID-19[19]. - The total operating expenses for the period were RMB 59,970 thousand, resulting in a profit before tax of RMB 18,709 thousand[141]. - The company incurred a financial cost of RMB 7,675,000 for the reporting period, indicating the cost of financing activities[143]. Assets and Liabilities - As of June 30, 2022, total assets amounted to RMB 3,222,289 thousand, and total liabilities were RMB 2,514,414 thousand[141]. - The group's debt-to-asset ratio was 78.0% as of June 30, 2022, slightly down from 78.9% as of December 31, 2021[24]. - The group's trade and other payables decreased to RMB 2,217.6 million as of June 30, 2022, down from RMB 2,436.1 million as of December 31, 2021, due to the impact of COVID-19 and supply chain disruptions[23]. - The total non-derivative financial liabilities were RMB 2,346,204 thousand, with bank borrowings of RMB 216,782 thousand[126]. Cash Flow - The net cash used in operating activities for the six months ended June 30, 2022, was RMB (259,654) thousand, compared to RMB (106,784) thousand in the same period of 2021, indicating a significant increase in cash outflow[73]. - Cash and cash equivalents as of June 30, 2022, were RMB 267,888 thousand, down from RMB 443,833 thousand at the end of 2021, a decrease of about 39.7%[64]. - The company reported a net cash inflow from financing activities of RMB 84,723 thousand for the six months ended June 30, 2022, compared to RMB 23,946 thousand in the same period of 2021[73]. Taxation - The group's income tax expense for the first half of 2022 was RMB 34 million, a decrease of 39.3% compared to RMB 56 million in the first half of 2021, primarily due to a reduction in pre-tax profit during the reporting period[20]. - The income tax expense for the six months ended June 30, 2022, was RMB 3,408,000, a decrease from RMB 5,640,000 in the same period of the previous year[156]. Shareholder Information - The board decided not to declare any dividends for the six months ended June 30, 2022, considering the need to maintain sufficient cash flow for ongoing operations and expansion[39]. - The total number of issued shares as of June 30, 2022, was 825,400,000[44]. - The company proposed a final dividend of HKD 0.016 per share, totaling approximately RMB 10,813,000, which was approved by shareholders[196]. Employee Information - As of June 30, 2022, the total number of employees in the group was 542, with employee costs amounting to approximately RMB 32.3 million, an increase from RMB 31.5 million for the same period in 2021[40]. - The company has no significant labor disputes or difficulties in hiring and retaining qualified employees during the reporting period[40]. Risk Management - The group has not experienced significant changes in its risk management policies since year-end[85]. - The group’s financial risk management plan focuses on minimizing potential adverse impacts on financial performance due to market unpredictability[84]. - The maximum credit risk exposure for the group is equivalent to the carrying amount of financial assets, including cash, trade receivables, and contract assets[90]. Receivables and Impairment - As of June 30, 2022, the total trade receivables and warranty receivables amounted to RMB 612,527,000, with an expected loss rate of 2.48% for receivables within one year[97]. - The total impairment provision for trade receivables was RMB 49,003,000, with the highest provision for receivables overdue for more than three years at RMB 33,619,000[97]. - The expected loss rate for warranty receivables was 3.46% for amounts due within one year, with a total value of RMB 16,742,000[97]. Market Strategy - The company plans to optimize project cost control and enhance risk management capabilities while focusing on environmental technology business to improve shareholder returns[12]. - The company aims to capture new market opportunities and increase market participation while emphasizing green construction and continuous investment in environmental technology[12]. - The company will expand its market share in Southeast Asia and participate in the "Belt and Road" initiative amid strong infrastructure demand in the region[13].

Financial Performance - The company reported a revenue of approximately RMB 2,262.8 million for the year, representing a growth of about 24.4% compared to the previous year[14]. - The marine construction segment's revenue increased by approximately 66.2% year-on-year, reaching about RMB 871.2 million, while the municipal engineering construction segment generated revenue of approximately RMB 1,391.6 million[14]. - The net profit for the year was approximately RMB 47.1 million[14]. - The gross profit margin for 2021 was 9.2%, slightly down from the previous year's margin[27]. - The total sales cost for 2021 was RMB 2,055.0 million, a 27.2% increase from RMB 1,615.7 million in 2020[29]. - Administrative expenses for 2021 were RMB 113.6 million, up 22.2% from RMB 93.0 million in 2020, but the percentage of administrative expenses to revenue decreased from 5.1% to 5.0%[33]. - Revenue from the top five customers amounted to approximately RMB 841.9 million, accounting for about 37.2% of total revenue for the year ended December 31, 2021[90]. - Revenue from the largest customer was approximately RMB 424.3 million, representing about 18.7% of total revenue for the same period[90]. - The company’s revenue for the year 2021 was RMB 2,262.8 million, an increase of approximately 24.4% compared to RMB 1,818.4 million in 2020[27]. Market Strategy and Development - The company plans to continue focusing on the domestic market and solidifying its presence in Southeast Asia while actively participating in the "Belt and Road" initiative[17]. - The company aims to deepen its 4+1 business development strategy, enhancing its investments in environmental technology and expanding into new areas such as carbon neutrality[17]. - The company plans to continue expanding its environmental engineering business and strengthen its market competitiveness amid a complex external environment[24]. - The company aims to enhance its market position and expand its share in the environmental technology sector while managing risks in overseas markets[26]. - The government is expected to increase investment to support major projects, providing significant opportunities for the company's further development[14]. Risk Management and Internal Controls - The company will enhance risk management and internal controls while optimizing its operational structure to improve market competitiveness[14]. - The company has integrated internal resources to respond to market changes and challenges posed by the pandemic[13]. - The company is closely monitoring the regulatory environment in Indonesia to mitigate risks associated with contractual arrangements[184]. Management and Governance - The company appointed Wan Yun as CEO on March 27, 2019, who has been with the group since January 2010, overseeing daily operations and overall management[58]. - Wang Lijiang, appointed as an executive director on April 9, 2018, has extensive experience in accounting and financial management, having worked in various roles since 2010[63]. - Wang Likai, appointed as an executive director on June 18, 2020, is responsible for human resources management and resource integration within the group[64]. - The company has a strong management team with diverse backgrounds in finance, real estate, and project management, enhancing its strategic capabilities[67]. - The independent non-executive director Sun Dajian has over 30 years of experience in accounting and finance, contributing to the company's audit and remuneration committees[69]. - The management team emphasizes the importance of financial oversight and strategic development to drive the company's growth[67]. - The board of directors includes members with significant experience in investment banking and corporate finance, providing valuable insights for strategic decisions[74]. Employee and Compensation Policies - The total employee cost for the group was approximately RMB 69.9 million for the reporting period, compared to RMB 58.1 million in the previous year, reflecting an increase of about 20.5%[1]. - As of December 31, 2021, the group had a total of 603 employees, with 274 from Shanghai Municipal Group and 155 from Sanhang Bente Ocean[1]. - The highest paid management personnel received a total salary of RMB 1,000,000 or less, with no individuals exceeding this amount[2]. - The company has not faced any significant labor disputes or difficulties in hiring and retaining qualified employees during the reporting period[1]. - The compensation committee has been established to review and recommend overall compensation policies for directors and senior management[1]. - The company has maintained compliance with local laws and regulations regarding employee compensation and benefits[1]. Shareholder and Dividend Information - The company has a dividend policy that allows the board to declare dividends based on operational performance, cash flow, and future development considerations[86]. - The board proposed a final dividend of HKD 0.016 per share for the year ended December 31, 2021, compared to HKD 0.008 per share for the previous year[87]. - The distributable reserves of the company as of December 31, 2021, amounted to RMB 291.5 million, calculated in accordance with the Cayman Islands Companies Law[100]. Procurement and Related Party Transactions - The total procurement agreement for 2021 has an annual cap of approximately RMB 20.0 million for the years ending December 31, 2021, 2022, and 2023[179]. - The amount related to transactions under the 2021 total procurement agreement for the year ended December 31, 2021, was approximately RMB 10.8 million[179]. - The procurement of raw materials from Wahzi Bounty Group is expected to be conducted on normal or better commercial terms compared to independent third-party providers[175]. - The company does not rely on Wahzi Bounty Group for raw material procurement due to the availability of alternatives in the market[175]. Contractual Arrangements and Investments - The company holds a 67% stake in Indonesian Bounty as of December 31, 2021, and has established contractual arrangements to consolidate control over the remaining 33% stake[181]. - The company has agreed to provide a total loan of USD 330,000 to PTPB for investment in Indonesian Bounty[187]. - The company is integrating Indonesia Pentong to comply with local laws, which limit foreign ownership to 67% in the port, channel, and marine engineering sectors[191].

[Company Information](index=3&type=section&id=Company%20Information) [Board of Directors](index=3&type=section&id=Board%20of%20Directors) The company's Board of Directors comprises executive, non-executive, and independent non-executive directors, ensuring a sound corporate governance structure - Executive Directors include **Mr. Wang Xiuchun (Chairman)**, **Ms. Wan Yun (CEO)**, **Mr. Wang Lijiang**, and **Mr. Wang Likai**[5](index=5&type=chunk) - **Mr. Wang Shizhong** serves as a Non-executive Director, while **Mr. Wang Hongwei**, **Mr. Sun Dajian**, and **Mr. Hou Siming** are Independent Non-executive Directors[5](index=5&type=chunk)[6](index=6&type=chunk) [Key Company Information](index=3&type=section&id=Key%20Company%20Information) This section lists the company's registered address, principal place of business, auditor, principal share registrar, Hong Kong share registrar, principal bankers, company website, and stock code - The company is incorporated in the **Cayman Islands**, with its principal place of business and headquarters in **Baoshan District, Shanghai, China**[5](index=5&type=chunk) - The auditor is **PricewaterhouseCoopers**[6](index=6&type=chunk) - The company's stock code is **02258**, and its website is **www.shbt-china.com**[1](index=1&type=chunk)[8](index=8&type=chunk) [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) [Business Overview](index=5&type=section&id=Business%20Overview) The company is a leading provider of port, waterway, marine, and municipal engineering services in China, covering port infrastructure, waterway engineering, urban public infrastructure construction, urban greening, and building construction services - The company's core businesses are **port, waterway, marine, and municipal engineering services**[10](index=10&type=chunk) - Key service areas include **port infrastructure, waterway engineering, urban public infrastructure construction, urban greening, and building construction**[10](index=10&type=chunk) [Business Review](index=5&type=section&id=Business%20Review) In the first half of 2021, the Group steadily developed its core businesses while actively exploring new areas, with revenue primarily from marine construction and municipal engineering construction segments - In the first half of 2021, the Group steadily developed its core businesses and actively explored new areas[11](index=11&type=chunk) 2021 H1 Revenue Breakdown by Segment | Segment | Revenue (RMB million) | | :--------------------------------- | :------------------- | | Marine Construction | 476.0 | | Municipal Engineering Construction | 484.5 | | **Total** | **960.5** | [Future Plans and Prospects](index=5&type=section&id=Future%20Plans%20and%20Prospects) The Group will seize opportunities from China's "14th Five-Year Plan" for new and traditional infrastructure, expand environmental engineering, and closely monitor international market changes to strengthen overseas risk management - For the domestic market, the Group will actively participate in **marine infrastructure upgrades, new urbanization construction, and environmental engineering** (e.g., water environment management)[14](index=14&type=chunk) - For the international market, the Group will closely monitor the impact of the pandemic and economic growth, review its overseas development strategy, and re-evaluate, refine, and upgrade its risk management system[16](index=16&type=chunk) [Financial Overview](index=6&type=section&id=Financial%20Overview) In the first half of 2021, the Group's revenue significantly increased by 59.3% year-on-year, driven by strong performance in marine and municipal engineering construction, while maintaining healthy liquidity and an improved gearing ratio [Revenue](index=6&type=section&id=Revenue) In the first half of 2021, the Group's consolidated revenue reached RMB 960.5 million, a significant 59.3% year-on-year increase, driven by growth in municipal engineering construction and marine construction segments - Consolidated revenue for 2021 H1 was **RMB 960.5 million**, a **59.3% increase** from RMB 602.8 million in 2020 H1[17](index=17&type=chunk) - Revenue from the marine construction segment was **RMB 476.0 million**, and from the municipal engineering construction segment was **RMB 484.5 million**[17](index=17&type=chunk) - Domestic revenue was **RMB 849.2 million**, and Southeast Asia revenue was **RMB 111.3 million**[17](index=17&type=chunk) [Cost of Sales and Gross Profit](index=6&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) Cost of sales increased by 64.9% with revenue, mainly due to higher raw material and subcontracting costs, yet gross profit still grew by 19.5% year-on-year - Consolidated cost of sales for 2021 H1 was **RMB 872.1 million**, a **64.9% increase** from 2020 H1[18](index=18&type=chunk) - Raw material and consumables costs increased by **45.8%**, and subcontracting costs increased by **99.0%**, primarily due to significant revenue growth in the marine construction segment[18](index=18&type=chunk) - Consolidated gross profit for 2021 H1 was **RMB 88.4 million**, a **19.5% increase** from 2020 H1[18](index=18&type=chunk) [Operating Profit](index=6&type=section&id=Operating%20Profit) Operating profit for the first half of 2021 increased by 22.0% year-on-year to RMB 37.5 million, primarily due to business expansion and revenue growth - Operating profit for 2021 H1 was **RMB 37.5 million**, a **22.0% increase** from RMB 30.7 million in 2020 H1[19](index=19&type=chunk) [Administrative Expenses](index=7&type=section&id=Administrative%20Expenses) Administrative expenses increased by 17.3% year-on-year, mainly due to higher staff costs, office expenses, and operating expenses from new business expansion - Administrative expenses for 2021 H1 were **RMB 47.7 million**, a **17.3% increase** from 2020 H1[22](index=22&type=chunk) [Income Tax Expense](index=7&type=section&id=Income%20Tax%20Expense) Income tax expense increased by 83.8% year-on-year, primarily due to higher revenue and profit before tax - Income tax expense for 2021 H1 was **RMB 5.6 million**, an **83.8% increase** from 2020 H1[23](index=23&type=chunk) [Trade and Other Receivables](index=7&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2021, net trade and other receivables decreased due to project completion and collection of overdue payments, while net contract assets increased - Net trade and other receivables decreased to **RMB 1,416.4 million** as of June 30, 2021 (December 31, 2020: RMB 1,525.8 million)[24](index=24&type=chunk) - Net contract assets increased from **RMB 1,161.8 million** as of December 31, 2020, to **RMB 1,214.4 million** as of June 30, 2021[24](index=24&type=chunk) [Trade and Other Payables](index=7&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2021, trade and other payables decreased, mainly due to payments made and certain project procurement payments not yet due - Trade and other payables decreased to **RMB 2,421.6 million** as of June 30, 2021 (December 31, 2020: RMB 2,577.7 million)[25](index=25&type=chunk) [Liquidity, Capital Structure, and Gearing Ratio](index=7&type=section&id=Liquidity%2C%20Capital%20Structure%2C%20and%20Gearing%20Ratio) The Group maintained a healthy liquidity position, with an improved gearing ratio, despite an increase in bank borrowings - Net current assets were approximately **RMB 200.8 million** as of June 30, 2021 (December 31, 2020: RMB 216.1 million)[26](index=26&type=chunk) - Cash and cash equivalents were approximately **RMB 346.0 million** as of June 30, 2021 (December 31, 2020: RMB 423.7 million)[26](index=26&type=chunk) - The gearing ratio was **79.4%** as of June 30, 2021 (December 31, 2020: 80.7%)[26](index=26&type=chunk) [Pledged Assets](index=7&type=section&id=Pledged%20Assets) As of June 30, 2021, the Group had no pledged assets - As of June 30, 2021, the Group had **no pledged assets**[27](index=27&type=chunk) [Foreign Exchange](index=8&type=section&id=Foreign%20Exchange) The Group's business is primarily conducted in RMB, HKD, BND, USD, and IDR, with no hedging policy adopted, managing foreign exchange risk through settlement in major currencies - The Group's business is primarily conducted in **RMB, HKD, BND, USD, and IDR**[29](index=29&type=chunk) - The Group has **not adopted any hedging policy**, mitigating foreign exchange risk by using major currencies for contracts and settlements[29](index=29&type=chunk) [Capital Expenditure and Commitments](index=8&type=section&id=Capital%20Expenditure%20and%20Commitments) The Group's capital expenditure is primarily funded by operating cash flow, with IPO proceeds providing additional funds, and no significant capital commitments during the reporting period - Capital expenditure is primarily funded by **cash flow from operations**, with net proceeds from the IPO providing additional funding[30](index=30&type=chunk) - As of June 30, 2021, the Group had **no significant capital commitments**[31](index=31&type=chunk) [Contingent Liabilities](index=8&type=section&id=Contingent%20Liabilities) As of June 30, 2021, the Group had no contingent liabilities - As of June 30, 2021, the Group had **no contingent liabilities**[32](index=32&type=chunk) [Significant Acquisitions and Disposals of Subsidiaries, Associates, and Joint Ventures](index=8&type=section&id=Significant%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%2C%20and%20Joint%20Ventures) In the first half of 2021, the Group did not undertake any significant acquisitions or disposals of subsidiaries, associates, or joint ventures - During the six months ended June 30, 2021, the Group had **no significant acquisitions or disposals** of subsidiaries, associates, or joint ventures[33](index=33&type=chunk) [Significant Investments Held](index=8&type=section&id=Significant%20Investments%20Held) As of June 30, 2021, the Group held no significant investments - As of June 30, 2021, the Group had **no significant investments**[34](index=34&type=chunk) [Use of Proceeds](index=9&type=section&id=Use%20of%20Proceeds) The Group's net IPO proceeds were approximately HKD 202.9 million, with HKD 123.4 million utilized as of June 30, 2021, mainly for project funding, equipment purchases, and general working capital, while strategic equity investments remain largely unutilized - Net IPO proceeds were approximately **HKD 202.9 million**, with **HKD 123.4 million utilized** as of June 30, 2021[37](index=37&type=chunk) - **HKD 68.8 million** allocated for strategic equity investments remained unutilized as of June 30, 2021, expected to be used by December 2022 or earlier[37](index=37&type=chunk) - Some uses of proceeds were revised on December 17, 2020, including reallocating funds for existing projects to port, waterway, and marine engineering projects, and expanding the use for new fleet and construction equipment purchases to include repair and maintenance[38](index=38&type=chunk) [Interim Dividend](index=10&type=section&id=Interim%20Dividend) The Board resolved not to declare any dividend for the six months ended June 30, 2021, to maintain sufficient cash flow for daily operations and expansion needs - The Board resolved **not to declare any dividend** for the six months ended June 30, 2021[41](index=41&type=chunk) - This decision aims to maintain **sufficient cash flow** for daily operations and expansion needs[41](index=41&type=chunk) [Employees and Remuneration Policy](index=10&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2021, the Group had 597 employees, with staff costs increasing by 40.5% year-on-year, and the Remuneration Committee overseeing director and senior management compensation without significant labor disputes - As of June 30, 2021, the Group had **597 employees**[42](index=42&type=chunk) - Staff costs (including directors' emoluments) for the reporting period were approximately **RMB 31.5 million**, a **40.5% increase** from RMB 22.4 million in the same period of 2020[42](index=42&type=chunk) - The company's Remuneration Committee provides recommendations on the remuneration policy for directors and senior management, ensuring no director determines their own remuneration[42](index=42&type=chunk) [Disclosure of Interests and Other Information](index=11&type=section&id=Disclosure%20of%20Interests%20and%20Other%20Information) [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares, and Debentures of the Company and its Associated Corporations](index=11&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%2C%20and%20Debentures%20of%20the%20Company%20and%20its%20Associated%20Corporations) As of June 30, 2021, Mr. Wang Xiuchun, Mr. Wang Likai, and Mr. Wang Shizhong each held 50.86% of the company's shares due to joint holdings and interests in controlled corporations Directors' and Chief Executive's Shareholdings (as of June 30, 2021) | Name of Director/Chief Executive | Capacity/Nature of Interest | Number of Shares Held | Percentage of Shareholding in Shares | | :----------------------- | :------------- | :----------- | :----------------- | | Mr. Wang Xiuchun | Interest held jointly with others | 419,792,836 | 50.86% | | Mr. Wang Likai | Interest held jointly with others | 419,792,836 | 50.86% | | Mr. Wang Shizhong | Interest in controlled corporations and interest held jointly with others | 419,792,836 | 50.86% | - Mr. Wang Shizhong, Mr. Ye Kangshun, Mr. Wang Xiuchun, Ms. Zhou Meng, Mr. Wang Shiqin, and Mr. Wang Likai are deemed to be parties acting in concert[46](index=46&type=chunk)[50](index=50&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company](index=12&type=section&id=Substantial%20Shareholders%27%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares%20of%20the%20Company) As of June 30, 2021, HuaZi Holding Limited and Ye Wang Zhou Holding Limited were substantial shareholders, with several individual shareholders holding shares directly or indirectly and deemed to be parties acting in concert Substantial Shareholders' Shareholdings (as of June 30, 2021) | Name of Shareholder | Nature of Interest | Number of Shares | Percentage of Shareholding in Shares | | :------------------------- | :------------- | :----------- | :----------------- | | HuaZi Holding Limited | Beneficial owner | 315,467,967 | 38.22% | | Ye Wang Zhou Holding Limited | Beneficial owner | 104,324,869 | 12.64% | | Mr. Ye Kangshun | Interest in controlled corporations and interest held jointly with others | 419,792,836 | 50.86% | | Ms. Zhou Meng | Interest held jointly with others | 419,792,836 | 50.86% | | Mr. Wang Shiqin | Interest held jointly with others | 419,792,836 | 50.86% | | HZ&BT Development Holding Limited | Beneficial owner | 143,542,720 | 17.39% | | Shilian Resources Limited | Beneficial owner | 55,714,444 | 6.75% | | Ms. Olive Chen | Interest in controlled corporations | 55,714,444 | 6.75% | - Mr. Wang Shizhong, Mr. Ye Kangshun, Mr. Wang Xiuchun, Ms. Zhou Meng, Mr. Wang Shiqin, and Mr. Wang Likai are deemed to be parties acting in concert[50](index=50&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=13&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) During the reporting period, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the reporting period, neither the Company nor any of its subsidiaries **purchased, sold, or redeemed any of the Company's listed securities**[55](index=55&type=chunk) [Share Option Scheme](index=13&type=section&id=Share%20Option%20Scheme) The company adopted a share option scheme in 2018 to incentivize employees, but as of June 30, 2021, no share options had been granted, exercised, lapsed, or cancelled - The Share Option Scheme was adopted on **October 19, 2018**, to incentivize and reward eligible persons[56](index=56&type=chunk) - From the listing date up to June 30, 2021, **no share options were granted, exercised, lapsed, or cancelled**[56](index=56&type=chunk) [Share Award Scheme](index=13&type=section&id=Share%20Award%20Scheme) The company adopted a share award scheme in 2020 to recognize contributions and incentivize future development, but as of June 30, 2021, no share awards had been granted, exercised, lapsed, or cancelled - The Share Award Scheme was adopted on **March 24, 2020**, to recognize contributions and incentivize future development[57](index=57&type=chunk) - From the adoption date up to June 30, 2021, **no share awards were granted, exercised, lapsed, or cancelled**[57](index=57&type=chunk) [Corporate Governance Code](index=13&type=section&id=Corporate%20Governance%20Code) The Group is committed to maintaining high standards of corporate governance and has complied with all applicable provisions of the Corporate Governance Code set out in Appendix 14 to the Listing Rules - The Group is committed to maintaining **high standards of corporate governance** to safeguard shareholders' interests and enhance corporate value and accountability[58](index=58&type=chunk) - The company has adopted and complied with **all applicable code provisions** of the Corporate Governance Code set out in Appendix 14 to the Listing Rules[58](index=58&type=chunk) [Changes in Directors' Information](index=14&type=section&id=Changes%20in%20Directors%27%20Information) Independent Non-executive Director Mr. Wang Hongwei was appointed as an independent director of Shanghai Shimao Co., Ltd. on May 13, 2021 - Independent Non-executive Director **Mr. Wang Hongwei** was appointed as an independent director of Shanghai Shimao Co., Ltd. (stock code: 600823.SH) on **May 13, 2021**[60](index=60&type=chunk) [Standard Code for Securities Transactions by Directors](index=14&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The Group has adopted the Model Code set out in Appendix 10 to the Listing Rules, and all directors confirmed full compliance with relevant provisions during the reporting period - The Group has adopted the **Model Code** set out in Appendix 10 to the Listing Rules as the code of conduct for directors' securities transactions[61](index=61&type=chunk) - All directors confirmed **full compliance** with the relevant provisions of the company's own code of conduct and the Model Code during the reporting period[61](index=61&type=chunk) [Review of Interim Report by Audit Committee](index=14&type=section&id=Review%20of%20Interim%20Report%20by%20Audit%20Committee) The Audit Committee has reviewed this interim report and raised no objections regarding the accounting policies adopted by the company - The Audit Committee has reviewed this interim report and raised **no objections** regarding the accounting policies adopted by the company[62](index=62&type=chunk) [Condensed Consolidated Interim Statement of Comprehensive Income](index=15&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Comprehensive%20Income) [Financial Performance for H1 2021](index=15&type=section&id=Financial%20Performance%20for%20H1%202021) In the first half of 2021, the company achieved significant growth in both revenue and operating profit, with corresponding increases in net profit and earnings per share Key Financial Data for H1 2021 (Unaudited) | Metric | Six Months Ended June 30, 2021 (RMB thousand) | Six Months Ended June 30, 2020 (RMB thousand) | Year-on-Year Change (%) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | :----------- | | Revenue | 960,533 | 602,832 | 59.3% | | Cost of sales | (872,089) | (528,793) | 64.9% | | Gross profit | 88,444 | 74,039 | 19.5% | | Operating profit | 37,481 | 30,728 | 22.0% | | Profit for the period | 24,166 | 23,235 | 4.0% | | Basic earnings per share (RMB cents) | 2.95 | 2.82 | 4.6% | | Diluted earnings per share (RMB cents) | 2.95 | 2.82 | 4.6% | - In other comprehensive income, currency translation differences were negative, while fair value changes of equity instruments measured at fair value through other comprehensive income were positive[66](index=66&type=chunk) [Condensed Consolidated Interim Statement of Financial Position](index=16&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Financial%20Position) [Asset and Liability Structure](index=16&type=section&id=Asset%20and%20Liability%20Structure) As of June 30, 2021, the company's total assets slightly decreased, but total liabilities decreased more significantly, leading to an increase in total equity and maintaining a robust capital structure Key Financial Position Data as of June 30, 2021 (Unaudited) | Metric | June 30, 2021 (RMB thousand) | December 31, 2020 (RMB thousand) | Change (%) | | :--------------------------------- | :--------------------------- | :--------------------------- | :----------- | | Total assets | 3,300,428 | 3,432,028 | -3.8% | | Total liabilities | 2,619,463 | 2,768,304 | -5.4% | | Total equity | 680,965 | 663,724 | 2.6% | | Property, plant and equipment | 89,828 | 107,116 | -16.2% | | Contract assets | 1,214,355 | 1,161,768 | 4.5% | | Trade and other receivables | 1,416,407 | 1,525,762 | -7.2% | | Cash and cash equivalents | 346,019 | 423,696 | -18.3% | | Trade and other payables | 2,421,626 | 2,577,677 | -6.0% | | Borrowings | 81,750 | 54,000 | 51.4% | - Total non-current assets were **RMB 794,041 thousand**, and total current assets were **RMB 2,506,387 thousand**[68](index=68&type=chunk) - Total non-current liabilities were **RMB 313,830 thousand**, and total current liabilities were **RMB 2,305,633 thousand**[72](index=72&type=chunk) [Condensed Consolidated Interim Statement of Changes in Equity](index=18&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Changes%20in%20Equity) [Overview of Equity Changes](index=18&type=section&id=Overview%20of%20Equity%20Changes) In the first half of 2021, the company's total equity increased due to profit for the period, though partially offset by currency translation differences and dividend distribution - Total equity was **RMB 663,724 thousand** as of January 1, 2021, increasing to **RMB 680,965 thousand** as of June 30, 2021[75](index=75&type=chunk) - Profit for the period was **RMB 24,166 thousand**, and currency translation differences were **RMB (1,837) thousand**[75](index=75&type=chunk) - Dividends distributed to shareholders amounted to **RMB 5,469 thousand**[75](index=75&type=chunk) [Condensed Consolidated Interim Statement of Cash Flows](index=19&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Cash%20Flows) [Overview of Cash Flows](index=19&type=section&id=Overview%20of%20Cash%20Flows) In the first half of 2021, cash flow from operating activities turned negative, net cash inflow from investing activities increased, and net cash inflow from financing activities significantly improved, yet cash and cash equivalents at period-end still decreased Key Cash Flow Data for H1 2021 (Unaudited) | Metric | Six Months Ended June 30, 2021 (RMB thousand) | Six Months Ended June 30, 2020 (RMB thousand) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net cash from operating activities | (106,784) | 47,201 | | Net cash from investing activities | 7,137 | 177 | | Net cash from financing activities | 23,946 | (7,068) | | Net (decrease)/increase in cash and cash equivalents | (75,701) | 40,310 | | Cash and cash equivalents at end of period | 346,019 | 514,625 | - Net cash from operating activities shifted from an inflow in 2020 H1 to an **outflow of RMB 106,784 thousand** in 2021 H1, primarily due to increased cash used in operations[79](index=79&type=chunk) - Net cash from financing activities shifted from an outflow in 2020 H1 to an **inflow of RMB 23,946 thousand** in 2021 H1, mainly attributable to new borrowings[79](index=79&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=20&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) [1 General Information](index=20&type=section&id=1%20General%20Information) This section outlines the company's registration details, business scope, listing status, and the presentation currency and review status of the financial statements - Huazi International Marine Engineering Company Limited was incorporated in the **Cayman Islands on December 20, 2017**[81](index=81&type=chunk) - The Group primarily provides **marine construction and municipal engineering construction services** in Mainland China and Southeast Asia[81](index=81&type=chunk) - The company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on **November 19, 2018**[81](index=81&type=chunk) - The condensed consolidated interim financial statements are presented in **RMB** and are **unaudited**[81](index=81&type=chunk)[82](index=82&type=chunk) [2 Basis of Preparation](index=20&type=section&id=2%20Basis%20of%20Preparation) The condensed consolidated interim financial statements are prepared in accordance with HKAS 34 and should be read in conjunction with the annual financial statements, with no significant accounting policy changes from new or amended standards adopted this period - The condensed consolidated interim financial statements are prepared in accordance with **Hong Kong Accounting Standard 34 "Interim Financial Reporting"**[83](index=83&type=chunk) - The Group was **not required to change its accounting policies** or make retrospective adjustments due to the adoption of new and amended standards during the reporting period[88](index=88&type=chunk) - Several new standards and amendments have been issued but are **not yet effective**, and the Group is assessing their full impact[91](index=91&type=chunk) [3 Financial Risk Management](index=22&type=section&id=3%20Financial%20Risk%20Management) The Group faces market risks (foreign exchange, interest rates), credit risk, and liquidity risk, managed by depositing cash with reputable banks, applying expected credit loss models, and maintaining sufficient liquidity, with fair value estimates of financial instruments using a three-level hierarchy [3.1 Financial Risk Factors](index=22&type=section&id=3.1%20Financial%20Risk%20Factors) The Group primarily faces foreign exchange risk (USD, BND, HKD) and credit risk (receivables and contract assets), managing the former without a hedging policy and the latter through an expected credit loss model - Foreign exchange risk primarily arises from **USD, BND, and HKD denominated receipts and payments**, and the Group has **not adopted a foreign exchange hedging policy**[95](index=95&type=chunk) - If RMB appreciates/depreciates by **5%** against USD, BND, and HKD, total profit for 2021 H1 would decrease/increase by **RMB 5,743 thousand**[96](index=96&type=chunk) - Credit risk arises from restricted cash, cash and cash equivalents, trade receivables, retention receivables, long-term trade receivables, and contract assets, with expected credit losses measured using the **simplified approach under HKFRS 9**[100](index=100&type=chunk)[105](index=105&type=chunk) - Net impairment losses on financial assets and contract assets for 2021 H1 were **RMB (2,975) thousand**[143](index=143&type=chunk) [3.2 Liquidity Risk](index=31&type=section&id=3.2%20Liquidity%20Risk) The Group manages liquidity risk by maintaining sufficient cash and credit facilities, with total contractual undiscounted cash flows for non-derivative financial liabilities amounting to RMB 2,395,128 thousand as of June 30, 2021 - The Group aims to maintain **sufficient committed credit facilities** to ensure adequate and flexible funding[146](index=146&type=chunk) Contractual Undiscounted Cash Flows of Non-Derivative Financial Liabilities (as of June 30, 2021) | Type of Liability | Not later than 1 year (RMB thousand) | 1 to 2 years (RMB thousand) | 2 to 5 years (RMB thousand) | Over 5 years (RMB thousand) | Total (RMB thousand) | | :------------------------- | :----------------------- | :------------------- | :------------------- | :------------------- | :--------------- | | Bank borrowings | 61,812 | 6,078 | 16,428 | 2,309 | 86,627 | | Lease liabilities | 1,564 | 722 | 1,118 | 2,583 | 5,987 | | Trade and other payables | 1,984,897 | 155,339 | 142,047 | 20,231 | 2,302,514 | | **Total** | **2,048,273** | **162,139** | **159,593** | **25,123** | **2,395,128** | [3.3 Fair Value Estimation](index=32&type=section&id=3.3%20Fair%20Value%20Estimation) Fair value estimation of financial instruments uses a three-level hierarchy, with financial assets measured at fair value through other comprehensive income primarily in Level 1, and financial assets measured at fair value through profit or loss in Level 3 - Financial instruments are categorized into **three levels** based on the reliability of input data: Level 1 for active market quotes, Level 2 for observable market data, and Level 3 for unobservable market data[149](index=149&type=chunk)[153](index=153&type=chunk) Recurring Fair Value Measurements (as of June 30, 2021) | Metric | Level 1 (RMB thousand) | Level 2 (RMB thousand) | Level 3 (RMB thousand) | Total (RMB thousand) | | :----------------------------------------------------------------- | :----------------- | :----------------- | :----------------- | :--------------- | | Financial assets at fair value through profit or loss | — | — | 50 | 50 | | Financial assets at fair value through other comprehensive income | 4,173 | — | — | 4,173 | | **Total** | **4,173** | **—** | **50** | **4,223** | - Valuation methods include using **market quotes or dealer quotes for similar instruments**, and **discounted cash flow analysis**[153](index=153&type=chunk) [4 Critical Accounting Estimates and Judgments](index=34&type=section&id=4%20Critical%20Accounting%20Estimates%20and%20Judgments) The significant judgments and sources of estimation uncertainty made by management in preparing the condensed consolidated interim financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2020 - The significant judgments and sources of estimation uncertainty made by management are **consistent with those applied in the consolidated financial statements** for the year ended December 31, 2020[156](index=156&type=chunk) [5 Segment Information](index=34&type=section&id=5%20Segment%20Information) The Group's business is divided into two reportable segments, marine construction and municipal engineering construction, both achieving revenue and gross profit growth in 2021 H1, with Mainland China as the primary revenue source [5.1 Description of Segments and Principal Activities](index=34&type=section&id=5.1%20Description%20of%20Segments%20and%20Principal%20Activities) The Group's two reportable segments are marine construction (including port infrastructure construction, waterway engineering, and other services) and municipal engineering construction (including urban public infrastructure construction, urban greening, and building construction) - Reportable segments are **marine construction** (including port infrastructure construction, waterway engineering, and other services) and **municipal engineering construction** (including urban public infrastructure construction, urban greening, and building construction)[157](index=157&type=chunk) - Segment results are measured by **gross profit**[158](index=158&type=chunk) [5.2 Segment Results and Other Information](index=35&type=section&id=5.2%20Segment%20Results%20and%20Other%20Information) In the first half of 2021, both marine construction and municipal engineering construction segments contributed significant revenue and gross profit, totaling RMB 88.4 million in gross profit H1 2021 Segment Results (Unaudited) | Segment | Revenue (RMB thousand) | Cost of Sales (RMB thousand) | Gross Profit (RMB thousand) | | :--------------------------------- | :---------------- | :-------------------- | :---------------- | | Marine Construction | 475,996 | (435,551) | 40,445 | | Municipal Engineering Construction | 484,537 | (436,538) | 47,999 | | **Total** | **960,533** | **(872,089)** | **88,444** | Segment Assets and Liabilities as of June 30, 2021 (Unaudited) | Segment | Total Assets (RMB thousand) | Total Liabilities (RMB thousand) | | :--------------------------------- | :-------------------- | :------------------ | | Marine Construction | 1,828,509 | 1,361,309 | | Municipal Engineering Construction | 1,577,553 | 1,363,788 | | Inter-segment elimination | (105,634) | (105,634) | | **Total** | **3,300,428** | **2,619,463** | [5.3 Revenue from Contracts with Customers and Cost of Sales](index=37&type=section&id=5.3%20Revenue%20from%20Contracts%20with%20Customers%20and%20Cost%20of%20Sales) In the first half of 2021, Mainland China was the Group's primary revenue source, contributing the majority of revenue and gross profit, with Southeast Asia also making contributions H1 2021 Revenue and Gross Profit by Geographical Area (Unaudited) | Area | Revenue (RMB thousand) | Cost of Sales (RMB thousand) | Gross Profit (RMB thousand) | | :----------------- | :---------------- | :-------------------- | :---------------- | | Mainland China | 849,222 | (768,340) | 80,882 | | Southeast Asia | 111,311 | (103,749) | 7,562 | | **Total** | **960,533** | **(872,089)** | **88,444** | - As of June 30, 2021, non-current assets in Mainland China were **RMB 91,350 thousand**, and in Southeast Asia were **RMB 13,854 thousand**[167](index=167&type=chunk) [5.4 Contract Assets and Liabilities](index=38&type=section&id=5.4%20Contract%20Assets%20and%20Liabilities) As of June 30, 2021, the Group's total contract assets increased, while total contract liabilities decreased, with project completion leading to significant transfers of contract assets to trade and retention receivables Contract Assets and Liabilities (as of June 30, 2021) | Metric | June 30, 2021 (RMB thousand) | December 31, 2020 (RMB thousand) | | :--------------------------------- | :--------------------------- | :--------------------------- | | Total contract assets | 1,214,355 | 1,161,768 | | Total contract liabilities | 94,717 | 111,454 | - In 2021 H1, approximately **RMB 150,663 thousand** of contract assets were transferred to trade receivables, and approximately **RMB 39,783 thousand** were transferred to retention receivables, primarily due to project completion[172](index=172&type=chunk) [6 Operating Profit](index=39&type=section&id=6%20Operating%20Profit) This section details the major expenses deducted from operating profit in the first half of 2021, including raw materials and consumables, subcontracting costs, staff costs, and depreciation and amortization H1 2021 Major Operating Expenses (Unaudited) | Expense Item | Six Months Ended June 30, 2021 (RMB thousand) | Six Months Ended June 30, 2020 (RMB thousand) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Raw materials and consumables used | 433,747 | 297,567 | | Subcontracting costs | 356,916 | 179,386 | | Wages and salaries, social welfare and benefits (including directors' emoluments) | 31,500 | 22,412 | | Depreciation of property, plant and equipment | 8,605 | 7,951 | - **Raw materials and consumables** and **subcontracting costs** were the largest operating expense items, both showing significant increases in 2021 H1[175](index=175&type=chunk) [7 Income Tax Expense](index=40&type=section&id=7%20Income%20Tax%20Expense) Net income tax expense for the first half of 2021 was RMB 5,640 thousand, comprising current and deferred income tax, with the Group subject to varying income tax rates across different jurisdictions and some subsidiaries enjoying preferential rates H1 2021 Income Tax Expense (Unaudited) | Metric | Six Months Ended June 30, 2021 (RMB thousand) | Six Months Ended June 30, 2020 (RMB thousand) | | :----------------- | :--------------------------------------- | :--------------------------------------- | | Current income tax | 7,636 | 3,871 | | Deferred income tax | (1,996) | (802) | | **Income tax expense — Net** | **5,640** | **3,069** | - The corporate income tax rate in China is **25%**, but high-tech enterprise Sanhang Benteng Marine enjoys a **preferential tax rate of 15%**[181](index=181&type=chunk) - Hong Kong profits tax rate is **16.5%**, Brunei income tax rate is **18.5%**, and Indonesian income tax is **3%** on construction revenue and **20%** on bank deposit interest income[180](index=180&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) [8 Basic and Diluted Earnings Per Share](index=41&type=section&id=8%20Basic%20and%20Diluted%20Earnings%20Per%20Share) In the first half of 2021, both basic and diluted earnings per share were RMB 2.95 cents, an increase from 2020 H1, with no dilutive potential ordinary shares outstanding during the reporting period H1 2021 Earnings Per Share (Unaudited) | Metric | Six Months Ended June 30, 2021 (Unaudited) | Six Months Ended June 30, 2020 (Unaudited) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Profit attributable to owners of the Company (RMB thousand) | 24,166 | 23,235 | | Weighted average number of ordinary shares in issue (thousand shares) | 819,008 | 825,263 | | **Basic earnings per share (RMB cents)** | **2.95** | **2.82** | | **Diluted earnings per share (RMB cents)** | **2.95** | **2.82** | - Diluted earnings per share are the same as basic earnings per share because there were **no dilutive potential ordinary shares outstanding** as of June 30, 2021, and 2020[189](index=189&type=chunk) [9 Property, Plant and Equipment](index=42&type=section&id=9%20Property%2C%20Plant%20and%20Equipment) As of June 30, 2021, the net book value of property, plant and equipment decreased, despite new additions during the period, with some fixed assets transferred to construction in progress for upgrades to enhance operational efficiency - As of June 30, 2021, the net book value of property, plant and equipment was **RMB 89,828 thousand** (December 31, 2020: RMB 107,116 thousand)[197](index=197&type=chunk) - Additions in 2021 H1 amounted to **RMB 4,075 thousand**, and depreciation expense was **RMB 8,605 thousand**[197](index=197&type=chunk) - Some fixed assets were transferred to construction in progress for **upgrades to extend their useful lives and enhance operational efficiency**[194](index=194&type=chunk) [10 Trade and Other Receivables](index=44&type=section&id=10%20Trade%20and%20Other%20Receivables) As of June 30, 2021, net trade and other receivables decreased, primarily due to the collection of project payments, with long-term trade receivables pledged as collateral for bank borrowings Net Trade and Other Receivables (as of June 30, 2021) | Metric | June 30, 2021 (RMB thousand) | December 31, 2020 (RMB thousand) | | :--------------------------------- | :--------------------------- | :--------------------------- | | Trade receivables — Net | 949,820 | 1,050,117 | | Retention receivables — Net | 222,523 | 241,690 | | Long-term trade receivables — Net | 50,850 | 52,518 | | **Total trade and other receivables** | **1,416,407** | **1,525,762** | - As of June 30, 2021, approximately **RMB 50,850 thousand** of long-term trade receivables were pledged as collateral for bank borrowings of **RMB 26,750 thousand**[206](index=206&type=chunk) Ageing Analysis of Trade Receivables and Bills Receivable (as of June 30, 2021) | Ageing | Amount (RMB thousand) | | :----------------- | :---------------- | | Within 3 months | 316,105 | | 4 to 6 months | 54,027 | | 7 to 12 months | 241,498 | | 1 to 2 years | 152,541 | | 2 to 3 years | 160,203 | | Over 3 years | 128,304 | | **Total** | **1,052,678** | [11 Cash and Cash Equivalents](index=47&type=section&id=11%20Cash%20and%20Cash%20Equivalents) As of June 30, 2021, cash and cash equivalents decreased, with restricted cash primarily designated for migrant worker wages and project expenses Cash and Cash Equivalents (as of June 30, 2021) | Metric | June 30, 2021 (RMB thousand) | December 31, 2020 (RMB thousand) | | :--------------------------------- | :--------------------------- | :--------------------------- | | Cash in hand | 247 | 296 | | Cash at bank | 412,905 | 537,631 | | Less: Restricted cash | (67,133) | (114,231) | | **Cash and cash equivalents** | **346,019** | **423,696** | - Restricted cash primarily includes **dedicated cash for migrant worker wages (RMB 43,504 thousand)** and **dedicated cash for project expenses (RMB 15,830 thousand)**[209](index=209&type=chunk) [12 Share Capital and Share Premium](index=48&type=section&id=12%20Share%20Capital%20and%20Share%20Premium) As of June 30, 2021, the company's total issued share capital comprised 825,400,000 ordinary shares, with share premium decreasing due to dividend distribution - As of June 30, 2021, the company's total issued share capital comprised **825,400,000 ordinary shares** with a par value of HKD 0.01 each, equivalent to **RMB 7,303 thousand**[211](index=211&type=chunk) - Share premium decreased from **RMB 296,997 thousand** as of January 1, 2021, to **RMB 291,528 thousand** as of June 30, 2021, primarily due to a dividend distribution of **RMB 5,469 thousand**[211](index=211&type=chunk) [13 Trade and Other Payables](index=49&type=section&id=13%20Trade%20and%20Other%20Payables) As of June 30, 2021, total trade and other payables decreased, primarily consisting of trade payables, retention payables, and long-term payables Trade and Other Payables (as of June 30, 2021) | Metric | June 30, 2021 (RMB thousand) | December 31, 2020 (RMB thousand) | | :--------------------------------- | :--------------------------- | :--------------------------- | | Trade payables | 1,530,473 | 1,674,743 | | Retention payables | 187,991 | 180,382 | | Long-term payables | 450,349 | 438,401 | | **Total trade and other payables** | **2,421,626** | **2,577,677** | - Trade payables and bills payable are primarily denominated in **RMB**[214](index=214&type=chunk) Ageing Analysis of Trade Payables and Bills Payable (as of June 30, 2021) | Ageing | Amount (RMB thousand) | | :----------------- | :---------------- | | Within 3 months | 598,204 | | 4 to 6 months | 211,368 | | 7 to 12 months | 142,315 | | 1 to 2 years | 260,130 | | 2 to 3 years | 141,409 | | Over 3 years | 177,497 | | **Total** | **1,530,923** | [14 Borrowings](index=51&type=section&id=14%20Borrowings) As of June 30, 2021, the Group's total borrowings increased to RMB 81,750 thousand, primarily comprising long-term and short-term bank borrowings, all secured by third-party or related-party guarantees Total Borrowings (as of June 30, 2021) | Metric | June 30, 2021 (RMB thousand) | December 31, 2020 (RMB thousand) | | :--------------------------------- | :--------------------------- | :--------------------------- | | Non-current portion of long-term bank borrowings — Secured | 22,000 | 24,500 | | Current portion of long-term bank borrowings — Secured | 4,750 | 4,500 | | Short-term bank borrowings — Secured | 55,000 | 25,000 | | **Total borrowings** | **81,750** | **54,000** | - Long-term bank borrowings are **guaranteed by Zhejiang Kexin Engineering Materials Co., Ltd.** (a third party) and **pledged by long-term trade receivables**[219](index=219&type=chunk) - Short-term bank borrowings are **guaranteed by Huazi Benteng**[221](index=221&type=chunk) [15 Dividends](index=52&type=section&id=15%20Dividends) The Board recommended a final dividend of HKD 0.80 cents per share for the year ended December 31, 2020, totaling approximately RMB 5,469 thousand, which was paid in August - The Board recommended a final dividend of **HKD 0.80 cents per share** (equivalent to RMB 0.66 cents) for the year ended December 31, 2020[223](index=223&type=chunk) - The total proposed dividend of approximately **RMB 5,469 thousand** was paid in August 2021[223](index=223&type=chunk) [16 Commitments](index=52&type=section&id=16%20Commitments) As of June 30, 2021, the Group had no significant capital commitments, but had minimum lease payments under irrevocable operating leases as a lessee and future minimum lease receivables as a lessor - As of June 30, 2021, the Group and the Company had **no significant capital commitments**[224](index=224&type=chunk) - As a lessee, minimum lease payments under irrevocable operating leases within 1 year amounted to **RMB 300 thousand**[228](index=228&type=chunk) - As a lessor, future minimum lease receivables under irrevocable operating leases within 1 year amounted to **RMB 1,932 thousand**[229](index=229&type=chunk) [17 Related Party Transactions](index=54&type=section&id=17%20Related%20Party%20Transactions) The Group engaged in various ordinary course business transactions with related parties, including construction services, buying and selling goods and services, and rent, with corresponding receivables, payables, and guarantees [17.1 Transactions with Related Parties](index=55&type=section&id=17.1%20Transactions%20with%20Related%20Parties) In the first half of 2021, the Group significantly increased construction services provided to related parties and engaged in raw material trading and rental transactions with them - Construction services provided to related parties totaled **RMB 40,562 thousand** in 2021 H1 (2020 H1: RMB 17,286 thousand)[235](index=235&type=chunk) - Raw materials bought from and sold to related parties totaled **RMB 10,504 thousand** in 2021 H1 (2020 H1: RMB 1,320 thousand)[238](index=238&type=chunk) - Rental income from related parties was **RMB 201 thousand** in 2021 H1 (2020 H1: RMB 192 thousand)[239](index=239&type=chunk) [17.2 Balances with Related Parties](index=57&type=section&id=17.2%20Balances%20with%20Related%20Parties) As of June 30, 2021, the Group had significant trade and retention receivables and contract assets from related parties, as well as trade and retention payables and long-term payables to related parties, with Huazi Benteng providing substantial guarantees to the Group Amounts Due from Related Parties (as of June 30, 2021) | Type | Amount (RMB thousand) | | :----------------- | :---------------- | | Trade and retention receivables | 174,059 | | Contract assets | 59,566 | | Other receivables | 4,866 | Amounts Due to Related Parties (as of June 30, 2021) | Type | Amount (RMB thousand) | | :----------------- | :---------------- | | Trade and retention payables | 15,539 | | Long-term payables | 50,510 | - As of June 30, 2021, **Huazi Benteng provided guarantees of RMB 220,000 thousand** to the Group[255](index=255&type=chunk) [18 Events After the Reporting Period](index=59&type=section&id=18%20Events%20After%20the%20Reporting%20Period) As of June 30, 2021, neither the Company nor the Group had undertaken any other significant events after the reporting period - Neither the Company nor the Group had undertaken any other **significant events after June 30, 2021**[256](index=256&type=chunk) [Definitions](index=59&type=section&id=Definitions) [Key Term Definitions](index=59&type=section&id=Key%20Term%20Definitions) This section provides definitions for key terms and abbreviations used in the interim report to ensure accurate understanding of its content by readers - Definitions are provided for terms such as "Concert Party Confirmation", "Audit Committee", "BND", "Board", "Company", "Directors", "Group", "HKD", "IDR", "Listing", "Listing Date", "Listing Rules", "Major Currencies", "Model Code", "PRC", "Prospectus", "RMB", "Reporting Period", "SFO", "Shares", "Shareholders", "Share Award Scheme", "Share Option Scheme", "Stock Exchange", "Sanhang Benteng Marine", and "USD"[258](index=258&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk]

Financial Performance - The company reported a total revenue of approximately RMB 1,818.4 million for the year ended December 31, 2020[12]. - Revenue from the marine construction services segment was approximately RMB 524.3 million, while the municipal engineering construction services segment generated approximately RMB 1,421.4 million[14]. - The net profit for the year was approximately RMB 46.8 million[14]. - The group's consolidated revenue for 2020 was RMB 1,818.4 million, a decrease of approximately 11.3% compared to RMB 2,049.9 million in 2019[27]. - The marine construction segment's revenue fell by 52.8% in Southeast Asia due to the pandemic and stricter resource approvals[27]. - The municipal engineering segment achieved a significant revenue growth of 25.9% year-on-year, despite the pandemic's impact[27]. - The gross profit margin for 2020 was 11.1%, down approximately 0.9% from the previous year[27]. - The total sales cost for 2020 was RMB 1,615.7 million, a decrease of 10.4% from RMB 1,803.2 million in 2019[28]. - The administrative expenses for 2020 were RMB 93.0 million, down 19.9% from RMB 116.1 million in 2019[29]. - The income tax expense for 2020 increased by 317.2% to RMB 12.1 million, primarily due to a higher profit contribution from the municipal engineering segment[30]. Business Strategy and Development - The company aims to deepen its business development strategy during the "14th Five-Year Plan" period, focusing on four core business pillars: port construction, channel construction, municipal engineering, and building construction[17]. - The company plans to expand into innovative environmental engineering services, enhancing its market competitiveness[13]. - The ongoing COVID-19 pandemic presents challenges, but the company is committed to monitoring market dynamics and optimizing resource allocation in core business areas[14]. - The company will continue to strengthen its presence in both domestic and overseas markets, aiming for sustainable development[14]. - Strategic cooperation with leading enterprises in various industries will be pursued to enhance business opportunities[13]. - The company emphasizes the importance of asset optimization and resource investment in core business areas to improve long-term shareholder returns[17]. - The company plans to explore new business areas and optimize resource integration to maximize shareholder returns amid ongoing market challenges[24]. Management and Governance - Wan Yun was appointed as the CEO on March 27, 2019, and has been with the group since January 2010, focusing on daily operations and financial management[55]. - Wang Lijiang, appointed as an executive director on April 9, 2018, has extensive experience in strategic investment and administrative management since joining the group in March 2014[58]. - Wang Likai, appointed as an executive director on June 18, 2020, is responsible for human resource management and resource integration within the group[59]. - The company has a strong management team with members holding degrees from reputable universities, including a Bachelor's in Management from China Agricultural University and a Master's in International Marketing from the University of Essex[56][60]. - The company is committed to maintaining high standards of corporate governance through its audit and remuneration committees[69]. - The leadership team is well-versed in international markets, which positions the company favorably for future expansion opportunities[69]. Shareholder Information - The board has proposed a final dividend of HKD 0.80 per share for the year ended December 31, 2020, compared to HKD 2.20 per share for the previous year[83]. - The company has established a dividend policy, considering operational performance, cash flow, financial condition, and future development when declaring dividends[82]. - As of December 31, 2020, the company's distributable reserves amounted to RMB 297.0 million, according to the Cayman Islands Companies Law[95]. - HuaZi Holding Limited held 315,467,967 shares, representing 38.22% of the total shares issued, as of December 31, 2020[121]. - Ye Wang Zhou Holding Limited owned 104,324,869 shares, accounting for 12.64% of the total shares issued[121]. - The total number of shares issued as of December 31, 2020, was 825,400,000 shares[122]. Employee and Labor Relations - The total employee cost for the group was approximately RMB 58.1 million, compared to RMB 55.7 million in 2019, reflecting an increase of about 2.5%[112]. - The group employed a total of 557 employees, with 135 from Sanhang Bente Ocean, 111 from Indonesia Bente, and 50 from Shanghai Sanhang Bente Environmental Technology Co., Ltd.[111]. - The board of directors and five highest-paid individuals received a total salary of RMB 1,000,000 or less for 9 individuals, with no individuals exceeding RMB 1,000,000[113]. - The company has not encountered significant difficulties in hiring and retaining qualified employees during the reporting period[111]. - The company had no strikes, work stoppages, or significant labor disputes affecting operations during the reporting period[111]. Contracts and Procurement - As of December 31, 2020, the company completed 260 contracts with an original contract value of RMB 929.9 million and entered into 296 new contracts valued at RMB 2,177.6 million[89]. - The company had 95 contracts on hand as of December 31, 2020, with an original contract value of RMB 7,668.0 million and a total uncompleted contract value of RMB 4,295.7 million[89]. - Revenue from the top five customers amounted to approximately RMB 773.3 million, accounting for about 42.5% of total revenue for the year ended December 31, 2020[87]. - The largest customer contributed approximately RMB 287.1 million, representing about 15.8% of total revenue for the same period[87]. - Procurement from the largest raw material supplier was approximately RMB 72.3 million, making up about 7.6% of total raw material and consumables costs[87]. - Total procurement from the top five raw material suppliers was approximately RMB 230.5 million, accounting for about 24.2% of total raw material and consumables costs[87]. - Payments to the top five subcontractors amounted to approximately RMB 422.7 million, representing about 81.8% of total subcontracting costs[87]. - The largest subcontractor accounted for approximately RMB 269.0 million, which is about 52.0% of total subcontracting costs[87]. Regulatory Compliance and Risks - The company is in compliance with Indonesian laws regarding foreign ownership limits, which restrict foreign ownership to a maximum of 67% in the port, channel, and marine engineering sectors[184]. - The company has applied for and received a waiver from the Stock Exchange regarding compliance with certain listing rules related to connected transactions[194]. - The company believes that the contractual arrangement may not be viewed as compliant with Indonesian laws in the future, posing potential risks[174]. - The company has confirmed that the contract arrangements comply with all relevant Indonesian laws and regulations[189].

Financial Performance - For the first half of 2020, the company's consolidated revenue was RMB 602.8 million, a decrease of approximately 30.0% compared to RMB 861.7 million in the same period last year[18]. - The operating profit for the first half of 2020 was RMB 30.7 million, a decrease of 46.4% compared to RMB 57.3 million in the first half of 2019, primarily due to delays in project schedules caused by the COVID-19 pandemic[22]. - Net profit for the period was RMB 23,235 thousand, compared to RMB 44,768 thousand in the previous year, representing a decline of approximately 48%[71]. - Basic and diluted earnings per share were both RMB 2.82, down from RMB 5.42 in the same period last year[71]. - The gross profit for the marine construction segment was RMB 25.3 million, and for the municipal engineering segment, it was RMB 48.7 million, before inter-segment eliminations[21]. - The gross profit margin for the first half of 2020 was significantly impacted by project locations and compositions, with a consolidated gross profit of approximately RMB 74.0 million, down 32.0% from RMB 108.9 million in the previous year[21]. Revenue Breakdown - The marine construction segment generated revenue of RMB 181.4 million, while the municipal engineering segment generated RMB 465.4 million, before inter-segment eliminations[13]. - Domestic revenue for the first half of 2020 was RMB 560.5 million, while revenue from Southeast Asia was RMB 42.3 million[18]. Cost and Expenses - The company's consolidated cost of sales for the first half of 2020 was RMB 528.8 million, down 29.8% from RMB 752.8 million in the first half of 2019[21]. - Administrative expenses for the first half of 2020 were RMB 40.7 million, down 12.3% from RMB 46.4 million in the same period of 2019, mainly due to cost control and improved office efficiency[23]. - Income tax expenses for the first half of 2020 were RMB 3.1 million, a decrease of 48.5% from RMB 6.0 million in the first half of 2019, attributed to reduced pre-tax profits and tax incentives received[24]. Assets and Liabilities - As of June 30, 2020, total assets were RMB 3,248,253 thousand, a decrease from RMB 3,425,344 thousand as of December 31, 2019[74]. - The debt-to-asset ratio as of June 30, 2020, was 79.8%, a slight improvement from 80.9% as of December 31, 2019[28]. - Total liabilities as of June 30, 2020, amounted to RMB 2,591,460,000, a decrease from RMB 2,771,281,000 as of January 1, 2020[79]. - Trade and other payables as of June 30, 2020, were RMB 2,147,398,000, a decrease from RMB 2,372,979,000 as of January 1, 2020[79]. Cash Flow - Net cash flow from operating activities for the six months ended June 30, 2020, was RMB 47,201,000, compared to RMB 22,595,000 for the same period in 2019, representing a 108.8% increase[86]. - Cash and cash equivalents at the end of the period were RMB 514,625,000, down from RMB 532,908,000 at the beginning of the year[86]. Employee and Shareholder Information - As of June 30, 2020, the group had a total of 498 employees, with 141 from Sanhang Bente Ocean, 128 from Indonesia Bente, and 225 from Shanghai Huazi Bente Municipal Engineering Co., Ltd.[42]. - Employee costs for the group, including director remuneration, were approximately RMB 224 million for the reporting period, compared to RMB 248 million for the six months ending June 30, 2019[42]. - The interim dividend declared was HKD 0.80 per share, compared to HKD 1.2 per share for the same period in 2019[40]. Strategic Initiatives - The company plans to actively monitor market conditions and implement measures to mitigate the negative impacts of the COVID-19 pandemic on its business performance[14]. - The company aims to leverage its leading position in China's port and channel industry to participate in infrastructure upgrades and expand into environmental engineering services[17]. - The company is focused on expanding its market share in construction projects in neighboring countries and regions, following the "Belt and Road" initiative[17]. - The company intends to explore strategic partnerships with leading enterprises in other industries to enhance overall efficiency[14]. Risk Management - The company faces foreign exchange risks, with a potential profit fluctuation of RMB 10,411,000 if the RMB appreciates or depreciates by 5% against the USD, BND, and HKD[121]. - Credit risk is primarily associated with cash, cash equivalents, trade receivables, and contract assets, with the maximum credit risk being equivalent to the carrying amounts of these financial assets[125]. - The company applies a simplified approach to measure expected credit losses for trade receivables and contract assets, considering historical loss rates and macroeconomic factors[131]. Acquisitions and Investments - The group acquired Shanghai Huazi Benteeng Municipal Engineering Co., Ltd. and its subsidiaries for an initial cash consideration of RMB 170 million[106]. - The acquisition is treated as a business combination under common control, with the acquired group's results included in the consolidated financial statements from the earliest period presented[110]. Compliance and Governance - The company has complied with all applicable codes under the corporate governance code during the reporting period[61]. - The company has established a remuneration committee to review and recommend compensation policies for all directors and senior management[42].

Financial Performance - The company reported an annual revenue of approximately RMB 2,049.9 million for the year ended December 31, 2019[13]. - Revenue from the marine construction services segment was approximately RMB 921.2 million, while the municipal engineering construction services segment generated about RMB 1,128.7 million[13]. - The company achieved a net profit of approximately RMB 101.2 million for the fiscal year[13]. - The company recorded a consolidated revenue of RMB 2,049.9 million for the fiscal year 2019, a decrease of 11.2% compared to RMB 2,307.5 million in the previous fiscal year[27]. - The consolidated cost of sales for 2019 was RMB 1,803.2 million, down 9.9% from RMB 2,001.7 million in 2018[28]. - The gross profit for the company in 2019 was approximately RMB 246.7 million, a decline of 19.3% from RMB 305.8 million in 2018[28]. - The income tax expense for 2019 was RMB 2.9 million, a significant decrease of 92.3% from RMB 37.9 million in 2018, due to preferential tax rates and R&D expense deductions[30]. - Revenue from the top five customers amounted to approximately RMB 585.2 million, accounting for about 28.5% of total revenue for the year ended December 31, 2019[92]. - The company’s largest customer contributed approximately RMB 191.9 million, representing about 9.4% of total revenue for the year ended December 31, 2019[92]. - The company’s subcontracting costs paid to the top five subcontractors were approximately RMB 387.6 million, representing about 71.3% of total subcontracting costs[92]. Business Strategy and Expansion - The acquisition of Shanghai Municipal Engineering expanded the company's business into municipal engineering and construction services, enhancing its service offerings[13]. - The company aims to deepen its business strategy with a focus on four core areas: port construction, channel construction, municipal engineering, and building construction, while also exploring environmental engineering as an innovative business[14]. - The company plans to pursue mergers and acquisitions to integrate internal and external resources, aiming to become a comprehensive service provider in design and construction contracting (EPC)[14]. - The company is committed to expanding its overseas market presence, particularly in Southeast Asia, leveraging existing operations in Indonesia and Brunei[14]. - The company aims to leverage opportunities from the Belt and Road Initiative, particularly in Southeast Asia, to increase its overall revenue[25]. - The company plans to further consolidate its market leadership in China's port and marine engineering sectors and expand into inland cities and environmental engineering[25]. - Future growth in the port, channel, and marine engineering industry in China is expected to be driven by specialized berth development and infrastructure upgrades[23]. Operational Insights - The company emphasizes enhancing its product and solution development capabilities to improve market competitiveness and customer service[15]. - The company acknowledges the impact of the COVID-19 pandemic on the global economy but remains focused on long-term business planning and resource allocation in core business areas[15]. - The group incurred capital expenditures of RMB 20.9 million for the purchase of construction machinery and equipment during the fiscal year 2019[38]. - The group completed the acquisition of Shanghai Municipal Engineering for a total consideration of RMB 170 million, approved by shareholders on December 24, 2019[44]. - The group plans to use the remaining proceeds for funding existing projects in China and Southeast Asia, purchasing new fleets and construction equipment, and strategic equity investments[47]. Governance and Management - The board of directors currently consists of eight members, including five executive directors and three independent non-executive directors[54]. - Executive Director Wang Xiuchun has been with the group since January 2002 and is responsible for overall management and strategic planning[56]. - Executive Director Wan Yun was appointed as CEO on March 27, 2019, and has been with the group since January 2010, focusing on daily operations and financial management[61]. - The company has a strong focus on business planning and resource integration, led by Executive Director Wang Shizhong, who joined the group in November 2003[57]. - The company aims to enhance its operational capabilities and customer relationships through the appointment of Olive Chen as an executive director[63]. - The management team is committed to developing new strategies for market expansion and product innovation[62]. - The company has a structured approach to financial oversight, with a dedicated audit committee chaired by an independent director[65]. - The board includes independent non-executive director Sun Dajian, who has extensive experience in accounting and finance, enhancing corporate governance[65]. Shareholder Information - The company proposed a final dividend of HKD 0.022 per ordinary share for the year ended December 31, 2019, subject to shareholder approval[88]. - As of December 31, 2019, the company had 59 contracts on hand with an original contract value of RMB 6,536.2 million, and the value of unfinished contracts was RMB 4,570.0 million[94]. - The company’s available distributable reserves as of December 31, 2019, amounted to RMB 313.6 million[100]. - As of December 31, 2019, the company had a total of 825,400,000 shares issued, with Wang Xiuchun holding 50.86% of the shares[123]. - The company has established a remuneration committee to review and recommend compensation policies for all directors and senior management[113]. - The company has a policy for employee compensation that aligns with local laws and regulations in China, Indonesia, and Brunei[113]. Risks and Challenges - The group anticipates that the COVID-19 pandemic will impact its performance in the first half of 2020, affecting trade receivables, project commencement, and potential bidding delays[49]. - The company has not adopted any hedging policies to mitigate foreign exchange risks, primarily conducting business in RMB, HKD, BND, USD, and IDR[37]. - There are potential risks associated with the contractual arrangements, including tax scrutiny from Indonesian authorities and possible conflicts of interest with local shareholders[180][181]. - The company has no insurance coverage for risks related to the contractual arrangements in Indonesia, emphasizing the need for careful legal oversight[180]. - The company plans to monitor the regulatory environment closely to mitigate risks associated with the contractual arrangements[180]. Acquisitions and Contracts - The company completed the acquisition of Shanghai Municipal Group on December 24, 2019, expanding its business into public infrastructure construction, including public roads, bridges, and tunnels[85]. - The company acquired all shares of Shanghai Municipal Engineering for a total consideration of RMB 170,000,000 (approximately HKD 188,888,889) on November 14, 2019[159]. - The payment structure includes an initial cash payment of RMB 10,000,000 (approximately HKD 11,111,111) within five business days after the fulfillment of conditions, and an additional RMB 25,000,000 (approximately HKD 27,777,778) to be paid by December 31, 2020[159]. - The company directly holds 67% of the equity in Indonesia Bente, complying with local laws that limit foreign ownership in port infrastructure construction to 67%[173]. - The company has entered into contractual arrangements to control the remaining 33% equity in Indonesia Bente to obtain economic benefits and manage risks[173].

Revenue Performance - The company's revenue for the first half of 2019 was RMB 469.3 million, an increase of approximately 4.8% compared to RMB 447.8 million in the same period of 2018[51]. - Revenue from mainland China was RMB 351.8 million, representing a 69.5% increase from the previous year's RMB 207.5 million[51]. - Revenue contribution from maritime and port infrastructure in mainland China was RMB 286.1 million, accounting for 61% of total revenue[43]. - Revenue from Southeast Asia was RMB 117.5 million, contributing 25% to total revenue[43]. - Revenue for the six months ended June 30, 2019, was RMB 469,319 thousand, an increase from RMB 447,793 thousand in the same period of 2018, representing a growth of approximately 4.6%[99]. - Revenue for the maritime and port infrastructure segment reached RMB 403,653,000, while the revenue for the channel and other engineering segment was RMB 65,666,000, totaling RMB 469,319,000 for the six months ended June 30, 2019[192]. - Revenue from external customers in mainland China for maritime and port infrastructure was RMB 286,130,000, up from RMB 142,751,000 in 2018, reflecting a significant growth[199]. Profitability and Expenses - The gross profit from continuing operations was RMB 62.3 million, a decrease of 0.8% from RMB 62.8 million in the first half of 2018[52]. - The operating profit from continuing operations was RMB 38.3 million, down 5.0% from RMB 40.3 million in the first half of 2018, primarily due to an increase in financial asset impairment provision of RMB 9.3 million[53]. - Administrative expenses decreased by 20.5% to RMB 17.1 million from RMB 21.5 million in the first half of 2018[54]. - The company reported a profit of RMB 35,209,000 for the six months ended June 30, 2019, compared to RMB 32,834,000 for the same period in 2018, marking an increase of approximately 7.9%[109]. - The profit before tax was RMB 37,669,000, with a net profit of RMB 35,209,000 for the six months ended June 30, 2019[192]. - The segment performance for maritime and port infrastructure was RMB 53,156,000, while the channel and other engineering segment contributed RMB 9,117,000, totaling RMB 62,273,000[192]. Financial Position - As of June 30, 2019, trade and other receivables increased to RMB 1,320.8 million from RMB 1,162.7 million at the end of 2018[57]. - Trade and other payables rose to RMB 1,536.1 million as of June 30, 2019, compared to RMB 1,515.8 million at the end of 2018[58]. - The company had short-term bank borrowings of RMB 20.0 million as of June 30, 2019, compared to none at the end of 2018[59]. - The net cash position was RMB 457.2 million as of June 30, 2019, up from RMB 385.9 million at the end of 2018[60]. - Total assets as of June 30, 2019, amounted to RMB 2,148,203 thousand, compared to RMB 2,089,680 thousand at the end of 2018, showing a growth of approximately 2.8%[102]. - Total equity increased to RMB 569,263 thousand from RMB 532,215 thousand, representing a rise of about 7.0%[102]. Cash Flow and Investments - Cash flow from operating activities for the six months ended June 30, 2019, was RMB 53,329,000, compared to RMB 56,075,000 for the same period in 2018, representing a decrease of approximately 4.7%[114]. - The net cash used in investing activities for the six months ended June 30, 2019, was RMB 2,674,000, compared to RMB 40,450,000 in 2018, indicating a significant reduction in investment outflows[114]. - Cash and cash equivalents at the end of June 30, 2019, increased to RMB 457,150,000 from RMB 147,346,000 at the end of June 30, 2018, reflecting a growth of approximately 210%[114]. - The cash flow from financing activities for the six months ended June 30, 2019, was RMB 20,000,000, compared to RMB 9,409,000 in 2018, showing an increase of approximately 112.5%[114]. Employee and Labor Relations - The company had a total of 257 employees as of June 30, 2019, with 138 employees in Shanghai and 83 in Indonesia[74]. - The company did not experience any strikes, work stoppages, or significant labor disputes during the reporting period[74]. - The compensation committee has been established to review and recommend compensation policies for the board and senior management[74]. - All employee compensation is in accordance with local laws and regulations in China, Indonesia, and Brunei[74]. - The company has not faced significant difficulties in hiring or retaining qualified employees[74]. Financial Risks and Credit Management - The company faces various financial risks, including market risk, credit risk, and liquidity risk, with a focus on minimizing potential adverse impacts on financial performance[146]. - The expected credit loss rate for trade receivables as of June 30, 2019, is 0.51% for receivables within one year, increasing to 28.66% for those over three years[166]. - The total provision for expected credit losses on trade receivables as of June 30, 2019, amounts to RMB 19,961,000, with the highest provision for receivables over three years at RMB 10,117,000[166]. - The company continuously evaluates the financial condition of its debtors to manage credit risk effectively[161]. - The company applies a simplified approach to measure expected credit losses for various financial assets, ensuring compliance with Hong Kong Financial Reporting Standards[158]. Accounting Policies and Standards - The company adopted the new accounting standard HKFRS 16 "Leases" effective January 1, 2019, which has impacted its financial reporting[120]. - The adoption of Hong Kong Financial Reporting Standard 16 resulted in the recognition of lease liabilities amounting to RMB 601,000, with a weighted average incremental borrowing rate of 4.35% as of January 1, 2019[132]. - The company has implemented practical expedients under HKFRS 16, including using a single discount rate for leases with similar characteristics and treating leases with a remaining term of less than 12 months as short-term leases[139]. - The company has not identified any significant segments affected by the policy changes, indicating no need for separate segment disclosures[138].

Financial Performance - The company recorded revenue of approximately RMB 1,489.7 million for the year ended December 31, 2018, representing a growth of about 5.5% compared to 2017[34]. - The net profit for the year was approximately RMB 104.1 million, reflecting a net profit growth of about 19.2% compared to 2017, primarily driven by increased revenue from overseas (Southeast Asia) operations[36]. - Revenue from Southeast Asia operations reached approximately RMB 537.8 million in 2018, marking a growth of about 21% compared to 2017[36]. - The company's revenue for the fiscal year 2018 increased by 5.5% to approximately RMB 1,489.7 million, compared to RMB 1,412.0 million in 2017[47]. - Revenue from operations in mainland China and Southeast Asia for 2018 was RMB 951.9 million and RMB 537.8 million, respectively, with Southeast Asia revenue growing by 21.3% compared to 2017[52]. - The gross profit from ongoing operations for 2018 was RMB 190.3 million, a 19.6% increase from RMB 159.1 million in 2017, driven by growth in Southeast Asia[53]. - The total sales cost for 2018 was RMB 1,299.4 million, an increase of 3.7% from RMB 1,252.8 million in 2017[53]. - The operating profit from ongoing operations for 2018 was RMB 129.9 million, up 12.7% from RMB 115.3 million in 2017[53]. Strategic Plans and Market Expansion - The company plans to leverage its listing to further consolidate and develop domestic port and channel construction businesses while increasing efforts in overseas markets, particularly in Southeast Asia[39]. - Future strategies include potential mergers and acquisitions to integrate internal and external resources and expand from offshore to onshore engineering services[39]. - The company aims to capture opportunities arising from initiatives such as the Beijing-Tianjin-Hebei coordinated development and the Belt and Road Initiative[39]. - The company aims to strengthen its market leadership in China's port, channel, and marine engineering industry and expand into Southeast Asia, particularly Indonesia[48]. - The company is focusing on expanding its business in Southeast Asia, particularly through projects related to China's Belt and Road Initiative[111]. - The company has expanded its business into Southeast Asia, becoming one of the first Chinese firms to enter the market under the "Belt and Road" initiative[52]. Management and Corporate Governance - The management team is committed to providing high-quality port and channel engineering services, supported by a well-experienced management team and advanced construction vessels and equipment[39]. - The company has a strong management team with diverse backgrounds in finance, engineering, and business development, enhancing its operational capabilities[86]. - The board of directors includes members with extensive experience in various industries, contributing to informed decision-making[82]. - The company appointed Mr. Wang Lijiang as an executive director on April 9, 2018, who is responsible for overall administrative management[78]. - Ms. Olive Chen joined the company on April 18, 2018, focusing on business development and customer relations[81]. - Mr. Sun Dajian was appointed as an independent non-executive director on October 19, 2018, and serves as the chairman of the audit committee[82]. - Mr. Hou Siming, with over 15 years of experience in investment banking, was appointed as an independent non-executive director on October 19, 2018[87]. - A remuneration committee has been established to provide recommendations on the overall compensation policy for the board and senior management[199]. Financial Position and Capital Management - The company emphasizes maintaining sufficient operating capital and cash flow to meet project funding needs and capital expenditures[35]. - As of December 31, 2018, the net trade and other receivables increased to RMB 1,162.7 million, up from RMB 991.3 million as of December 31, 2017, primarily due to increased progress payments from new projects in China and Indonesia[59]. - The trade and other payables rose to RMB 1,515.8 million as of December 31, 2018, compared to RMB 1,122.0 million as of December 31, 2017, driven by procurement related to new projects[60]. - The net current assets and net cash amounted to approximately RMB 328.9 million and RMB 385.9 million, respectively, as of December 31, 2018, down from RMB 594.7 million and RMB 122.3 million in the previous year[61]. - The debt-to-asset ratio increased to 74.5% as of December 31, 2018, from 65.7% as of December 31, 2017, due to increased trade payables from new projects[61]. - The company had no bank borrowings as of December 31, 2018[61]. - The net proceeds from the IPO amounted to approximately HKD 202.9 million, with only HKD 32.2 million utilized by the report date[65]. - The company spent RMB 0.7 million on purchasing construction machinery and equipment during the fiscal year 2018[63]. Operational Highlights - The company completed 22 contracts with an original contract value of RMB 1,312.2 million and entered into 47 new contracts valued at RMB 2,193.6 million during the year[140]. - The company has over 430 qualified raw material suppliers, with the largest supplier accounting for approximately RMB 104.2 million, or 16.0% of total raw material costs[141]. - The company maintains an average business relationship of about three years with its top five raw material suppliers in China[141]. - The total procurement cost from the top five suppliers amounted to RMB 175.6 million, representing approximately 30.4% of the total subcontracting costs during the same period[144]. - The group had over 170 qualified subcontractors, with an average business relationship of about eight years with the top five subcontractors in China[144]. Risk Management and Compliance - The company emphasizes compliance with relevant laws and regulations, maintaining relationships with employees, customers, and suppliers[106]. - The group faces foreign exchange risks primarily from transactions in USD and Brunei Dollar, with significant cash balances also in HKD and USD[184]. - The management believes that the foreign exchange risk is not significant as most functional currencies align with transaction currencies[184]. - Currently, there is no foreign exchange hedging policy in place, but management monitors risks and may consider hedging if necessary[184]. Employee and Compensation - As of December 31, 2018, the group employed a total of 264 employees, with 140 from Sanhang Benteng Ocean and 55 from PT. Shanghai Third Harbor Benteng Construction and Engineering[199]. - The employee compensation is aligned with local laws in China, Indonesia, and Brunei, including benefits such as retirement insurance and medical insurance[199].