Financial Performance - The company recorded revenue of approximately RMB 6.0277 billion for the fiscal year ending December 31, 2024, representing a year-on-year increase of approximately 19.2%[8] - Shareholders' profit for the year was approximately RMB 25.7 million, a decrease of about 91.0% due to a one-time non-cash goodwill impairment in the hazardous waste segment[8] - The total revenue increased from approximately RMB 5.0576 billion for the year ended December 31, 2023, to approximately RMB 6.0277 billion for the year ended December 31, 2024, representing a growth of about 19.2%[39] - The group reported a decrease in gross margin from 20.2% for the year ended December 31, 2023, to 19.1% for the year ended December 31, 2024, primarily due to a decline in the gross margin of hazardous waste treatment business[39] - The gross profit margin for urban environmental governance services decreased by 1.1% to 20.9% in 2024, compared to 22.0% in 2023[22] - The gross margin for hazardous waste treatment services dropped significantly from 17.2% in 2023 to 5.0% in 2024, attributed to increased competition and reduced demand[47] - Other income and net gains have decreased to RMB 52.9 million from RMB 97 million last year, primarily due to reductions in interest income and government subsidies[57] - Administrative expenses have increased to RMB 593.5 million from RMB 523.7 million last year, mainly due to ongoing business expansion in urban services[58] - Income tax expenses have increased from RMB 86 million last year to RMB 108.9 million this year, mainly due to the continued expansion of urban services[62] Urban Services and Projects - The company secured 64 urban service projects through public bidding and acquisitions, with a total contract value and estimated annual revenue of approximately RMB 7.8475 billion and RMB 1.4969 billion, respectively[8] - The group has signed management contracts for 231 urban service projects across 25 provinces and municipalities[21] - The group operates 231 urban service projects under various models, including 99 integrated cleaning projects and 118 traditional environmental sanitation projects[30] - The group successfully won a total of 35 urban service projects through public bidding, with a total contract value of approximately RMB 6.4218 billion and an estimated annual revenue of approximately RMB 987.4 million[28] - The group recorded a total of 231 urban service projects as of December 31, 2024, compared to 186 projects in 2023[41] Strategic Initiatives and Innovations - The company has implemented strategies to enhance service quality and management capabilities, focusing on high-quality expansion of urban service projects[11] - The company is actively exploring technological applications and service innovations to strengthen its core competitiveness in a rapidly changing market environment[11] - The company is advancing digital transformation initiatives, including the development of standardized management systems and data collection platforms to improve operational efficiency[13] - The group aims to expand its urban management capabilities and enhance service efficiency through the development of an independent smart city management platform[30] - The company plans to invest 100 million in research and development over the next three years to drive innovation[168] Financial Management and Cash Flow - The company is focusing on strengthening cash flow management and enhancing customer trust and satisfaction in response to industry cash flow pressures[18] - The company aims for "high-quality development" by focusing on profitability, investment returns, and risk control, with a strategic emphasis on "efficiency enhancement, innovation-driven, and value cultivation" by 2025[80] - The net debt ratio increased to 44.4% as of December 31, 2024, compared to 38.5% last year, primarily due to increased net debt from business expansion[76] - The company has pledged a performance guarantee of RMB 132,062,000 as of December 31, 2024, to ensure compliance with contractual obligations[84] Sustainability and Corporate Governance - The company is committed to sustainable development and aims to systematically reduce its operational carbon footprint while enhancing cash flow management[81] - The company has established a dynamic risk monitoring mechanism to support sustainable development goals[81] - The Sustainability Committee held two meetings in the fiscal year ending December 31, 2024, focusing on ESG management and climate change risks[130] - The group conducted ESG risk assessments this year to actively manage environmental and social risks[132] - The company is committed to promoting green procurement and sustainable supply chain management[17] Shareholder Relations and Dividends - The company proposed a cash dividend of HKD 0.013 per share, totaling HKD 0.025 per share for the year, to reward shareholders for their long-term support[8] - The board proposed a final dividend of 1.3 HK cents per share for the year ending December 31, 2024, down from 1.5 HK cents in 2023, pending shareholder approval[92] - The company’s dividend policy aims to ensure sufficient reserves for future development while allowing shareholders to share in profits[153] - The board considers various factors when declaring dividends, including financial performance, retained earnings, and capital expenditure needs[154] Board and Management Structure - The board consists of eight experienced directors, ensuring a balanced mix of skills and backgrounds to guide the group's business development[111] - The company has adopted a board diversity policy to ensure a balanced skill set and diverse perspectives among directors[111] - The board is responsible for ongoing supervision of risk management and internal control systems, ensuring they are effective and adequate to protect shareholder interests[132] - The audit committee, consisting of three independent non-executive directors, has held three meetings to review the financial statements for the year ending December 31, 2024, and discussed accounting principles and internal controls[121] Market Outlook and Future Plans - The urban services industry is projected to grow at a compound annual growth rate of no less than 13% over the next five years, with the market size exceeding RMB 320 billion in 2024[8] - The company has set a future outlook with a revenue target of 1.5 billion for the next fiscal year, indicating an expected growth of 25%[161] - Market expansion plans include entering two new international markets by the end of 2024, aiming to increase market share by 10%[163] - The company is exploring potential acquisitions to enhance its service offerings, with a budget allocation of 200 million for strategic investments[164]

Summary of Conference Call Records Company and Industry Overview - The conference call pertains to the urban environmental services industry, specifically focusing on a company involved in city services, environmental governance, and construction services [1][2][3]. Key Points and Arguments Financial Performance - Other business revenue accounted for 9%, totaling 180 million, while city services revenue was 1.8 billion, representing 3% of total revenue [1]. - Urban environmental governance service revenue for 2020 was 4.92 billion, up 21.1% from 4.06 billion in 2023 [1]. - Overseas revenue reached 330 million, a significant increase from zero in the previous year [1]. - Construction service revenue for 2020 was 57 million, down 79.8% from 283 million in 2023, attributed to nearing completion of landscaping projects [1]. - The gross margin for domestic urban environmental governance services in 2024 was 21.9%, slightly down from 22% in 2023 [2]. - The overall gross margin for urban environmental governance services was 20.9%, down 1.1% from 22% in 2023 [2]. Operational Insights - The company had 231 projects in operation by the end of 2024, with 35 new projects added and a total contract value of 7.85 billion, leading to an annualized contract revenue of 1.5 billion [1][6]. - The average processing price for waste treatment in 2024 was 1,277 yuan per ton, down 6.6% from 1,367 yuan in 2023 [2]. - The company reported a decrease in the average sales price for resource recovery, with a 14.5% drop in sales volume from 55,000 tons in 2023 to 47,000 tons in 2024 [3]. Cost and Expense Management - Management expenses as a percentage of sales were 9.8% in 2020, down from 10.6% in 2023 [4]. - Capital expenditures for 2020 were approximately 630 million, a decrease of about 290 million from 920 million in 2023 [4]. - The company reported a significant increase in labor costs and operational expenses, impacting overall profitability [4]. Cash Flow and Debt Management - The current ratio for 2024 was 187.8%, up from 165.2% in 2023, primarily due to the conversion of short-term loans to long-term loans [5]. - The debt-to-equity ratio increased to 44.4% in 2024 from 38.5% in 2023, attributed to a decrease in cash balance and net debt increase [5]. - Free cash flow improved to a net inflow of 100 million in 2024, compared to an outflow of 190 million in 2023 [5]. Strategic Insights - The company is shifting its focus from scale to quality, emphasizing cash flow and profitability as core objectives [9]. - The management plans to enhance operational efficiency and reduce project initiation costs to improve cash flow quality [10]. - The company is actively pursuing partnerships and collaborations to foster innovation and improve service delivery [11]. Market Dynamics - The urban services sector is experiencing pressure from local government financial constraints, leading to price competition and reduced margins [8]. - The introduction of long-term government bonds and equipment upgrades is expected to improve cash flow for service fees [8]. - The company is adapting to new demands driven by AI technology, focusing on smart city solutions [19]. Additional Important Information - The company has been recognized for its ESG efforts, achieving a score of 52 in the S&P CSA, surpassing 93% of its peers [11]. - The management is committed to maintaining a sustainable dividend policy despite recent profit declines [17]. - The company is exploring opportunities for project disposals in the waste management sector due to ongoing losses [18]. This summary encapsulates the key insights and financial metrics discussed during the conference call, providing a comprehensive overview of the company's performance and strategic direction in the urban environmental services industry.

Investment Rating - The report maintains a "Buy" rating for the company [8] Core Views - The company reported a revenue of 6.028 billion RMB for 2024, a year-on-year increase of 19.2%, but the net profit attributable to shareholders was only 25.69 million RMB, a significant decline of 91.0% year-on-year, primarily due to goodwill impairment losses in hazardous waste business amounting to 238 million RMB [1][5] - Despite the challenges in the hazardous waste sector, the urban services business showed strong demand, with new project contracts exceeding 6.4 billion RMB in 2024, indicating potential for revenue recovery [1][2] Summary by Sections Financial Performance - In 2024, the urban services business generated 5.31 billion RMB in revenue, accounting for 88% of total revenue, with a year-on-year growth of 22.3% [2] - The hazardous waste treatment business reported revenue of 536 million RMB, with a gross margin of 5.0%, down 12.2 percentage points year-on-year due to decreased demand and average processing prices [4] Order Book and Growth Potential - As of the end of 2024, the company had a total backlog of urban service contracts amounting to 29.84 billion RMB, with new orders totaling 7.85 billion RMB in 2024 [3] - The acquisition of 85% of Hong Kong Chengmei Service Co., which has 35 urban service projects, is expected to enhance the company's market share and contribute to revenue growth [2] Earnings Forecast - The earnings forecast for the company has been revised downwards, with expected net profits of 240 million RMB, 250 million RMB, and 260 million RMB for 2025, 2026, and 2027 respectively [5] - The target price has been adjusted to 0.47 HKD based on a 6.5x PE ratio for 2025, reflecting the company's lower liquidity in the Hong Kong market [5][9]

Financial Performance - The group recorded revenue of approximately RMB 6.028 billion for the year ending December 31, 2024, an increase of about 19.2% compared to RMB 5.058 billion for the year ending December 31, 2023[3]. - The profit attributable to shareholders for the year was approximately RMB 25.693 million, a decrease of about 91.0% from RMB 284.734 million in the previous year, primarily due to a goodwill impairment loss of RMB 237.683 million recognized during the year[4]. - The group reported a pre-tax profit of RMB 195.263 million for the year, down from RMB 425.384 million in the previous year[4]. - The group’s total comprehensive income for the year was RMB 90.292 million, compared to RMB 331.506 million in the previous year[5]. - The adjusted profit attributable to the owners of the parent company for 2024 was RMB 357,668 thousand, slightly down from RMB 368,797 thousand in 2023, reflecting a decrease of approximately 3.1%[18]. - The gross profit for the group in 2024 was RMB 1,148,835 thousand, compared to RMB 1,022,822 thousand in 2023, indicating a year-on-year increase of about 12.3%[18]. - The group’s gross profit margin decreased from 20.2% for the year ended December 31, 2023, to 19.1% for the year ended December 31, 2024, primarily due to a decline in the gross profit margin of hazardous waste treatment services[53]. Revenue Sources - The group secured 64 urban service projects through public tenders and acquisitions, with a total contract value and estimated annual revenue of approximately RMB 7.848 billion and RMB 1.497 billion, respectively[3]. - Revenue from the mainland China market was RMB 5,692,940 thousand in 2024, up from RMB 5,057,613 thousand in 2023, marking an increase of approximately 12.6%[20]. - The group’s income from the city services segment in 2024 was RMB 5,310,493 thousand, an increase from RMB 4,343,559 thousand in 2023, representing a growth of approximately 22.2%[18]. - Revenue from urban environmental governance services was RMB 5,253,268,000, up 29.4% from RMB 4,060,872,000 in the previous year[22]. - The company’s hazardous waste treatment business revenue decreased by 1.9% to RMB 536,459 thousand in 2024 from RMB 546,759 thousand in 2023[41]. Dividends and Shareholder Returns - The proposed final dividend is HKD 0.013 per share, with a total annual dividend of HKD 0.025 per share[3]. - The company plans to distribute a final dividend of HKD 0.013 per share for 2024, down from HKD 0.015 per share in 2023, totaling approximately RMB 42,538,000[32]. - The company repurchased 39,700,000 shares at a total cost of approximately RMB 20,746,000 in 2024, compared to 3,636,000 shares for RMB 1,456,000 in 2023[40]. Assets and Liabilities - The group's cash flow remains robust, with total assets amounting to RMB 8.581 billion as of December 31, 2024, compared to RMB 8.127 billion in 2023[9]. - Current liabilities totaled RMB 2.682 billion, with a net current asset value of RMB 2.355 billion as of December 31, 2024[9]. - The group’s non-current assets decreased to RMB 3.544 billion from RMB 3.842 billion in the previous year, primarily due to the reduction in goodwill[7]. - Total bank borrowings increased to RMB 2,632,026 thousand in 2024 from RMB 2,562,139 thousand in 2023, marking a rise of 2.7%[39]. - The net debt ratio increased to 44.4% as of December 31, 2024, from 38.5% as of December 31, 2023, primarily due to increased net debt from business expansion[80]. Operational Highlights - The company operated a total of 231 urban service projects as of December 31, 2024, an increase from 186 projects at the beginning of the year[44]. - The company successfully won 35 urban service projects through public bidding, with a total contract value of approximately RMB 6,090.9 million in mainland China and RMB 330.9 million in Hong Kong[45]. - The actual processing volume of the group's harmless disposal projects increased from 230,027 tons for the year ended December 31, 2023, to 285,637 tons for the year ended December 31, 2024[59]. Expenses and Costs - Administrative expenses increased to RMB 593.5 million for the year ended December 31, 2024, compared to RMB 523.7 million in the previous year, primarily due to ongoing business expansion in urban services[63]. - Other expenses rose to RMB 48.7 million for the year ended December 31, 2024, from RMB 30.9 million in the previous year, mainly due to impairment losses on trade receivables[64]. - The group’s financing costs for 2024 were RMB 59,234 thousand, slightly down from RMB 61,331 thousand in 2023, reflecting a decrease of about 3.4%[18]. Strategic Focus and Future Plans - The company aims to enhance operational efficiency, drive innovation, and deepen value cultivation as its strategic focus for 2025[82]. - The company plans to implement a "high-quality development" strategy to improve profitability, reduce growth rates, and control risks[83]. - The company is focusing on developing smart sanitation equipment, low-carbon technologies, and digital platforms to create a differentiated competitive advantage[83]. Governance and Compliance - The company emphasizes high levels of corporate governance to achieve sustainable development and enhance performance, adhering to the corporate governance code as of December 31, 2024[96]. - All directors confirmed compliance with the standard code for securities trading as of December 31, 2024[97]. - The audit committee, consisting of three independent non-executive directors, reviewed the company's financial reporting procedures and internal controls for the year ending December 31, 2024[98]. - Deloitte has verified the financial figures in the preliminary announcement for the year ending December 31, 2024, although their work does not constitute an audit[99].

Financial Performance - The company recorded revenue of approximately RMB 2.6878 billion for the six months ended June 30, 2024, representing an increase of about 20.2% compared to the same period last year[5]. - The profit attributable to shareholders for the same period was approximately RMB 128.5 million, a decrease of about 24.5% year-on-year[5]. - The gross profit for the same period was RMB 556.846 million, compared to RMB 514.758 million in 2023, reflecting an increase of about 8.2%[44]. - The net profit for the six months ended June 30, 2024, was RMB 151.421 million, down from RMB 197.498 million in 2023, indicating a decrease of approximately 23.3%[44]. - The group's net profit attributable to shareholders for the six months ended June 30, 2024, was RMB 128,499,000, a decrease of 24.5% from RMB 170,153,000 in the same period last year[12]. - The basic and diluted earnings per share for the six months ended June 30, 2024, were RMB 3.61, down from RMB 4.73 in 2023, representing a decrease of about 23.7%[44]. - The adjusted profit attributable to the owners of the parent for the six months ended June 30, 2024, was RMB 173,135 thousand, compared to RMB 208,235 thousand in the prior year, indicating a decrease of 17%[56]. Revenue Segments - The urban environment governance services segment generated revenue of RMB 2,392,808,000, reflecting a 25.5% increase from RMB 1,906,811,000 in the previous year[12]. - Urban services revenue reached approximately RMB 2.402 billion for the six months ended June 30, 2024, up from RMB 1.907 billion for the same period in 2023, with a gross profit margin decline from 23.8% to 22.4%[22][24]. - The hazardous waste treatment business reported a revenue decline of 15.1% to RMB 228,956,000, with a gross profit margin of 4.5%[12]. - The revenue from urban environmental governance services and construction services amounted to RMB 2,392,808,000, compared to RMB 1,906,811,000 in the previous year, reflecting a growth of about 25.5%[59]. Dividends and Shareholder Returns - The interim dividend declared is HKD 0.012 per share, with a payout ratio of approximately 30.2%[5]. - The company declared an interim dividend of HKD 0.012 per ordinary share for the six months ended June 30, 2024, payable to shareholders on the register as of September 13, 2024[104]. - The company declared a dividend of RMB 48,548,000 for the year-end 2023, compared to RMB 31,680,000 for the year-end 2022, marking an increase of approximately 53.2%[47]. Operational Developments - The company successfully acquired Chengmei Service Co., Ltd., expanding its urban service business into the Hong Kong market[7]. - The company added 48 new awarded projects during the reporting period, indicating a strong growth trajectory in project acquisition[7]. - The group has signed management contracts for 224 urban service projects across 25 provinces and municipalities[11]. - The group completed the acquisition of Chengmei on June 25, 2024, for a total consideration of HKD 44,171,000, enhancing its presence in the Hong Kong urban services market[18]. Challenges and Strategic Focus - The hazardous waste treatment industry is facing severe challenges, including overcapacity and declining profits, prompting the company to seek operational efficiency improvements[7]. - The company is focusing on enhancing mechanization and digitalization levels to adapt to new urbanization development requirements[5]. - The group aims to strengthen risk management and compliance, enhancing its investment assessment mechanisms and building a green supply chain[9]. - Despite macroeconomic challenges, the group anticipates supportive policies for stable economic operation and aims for long-term high-quality development in the industry[10]. Financial Position and Cash Flow - Cash and cash equivalents increased to approximately RMB 1.2336 billion as of June 30, 2024, compared to RMB 1.0807 billion as of December 31, 2023[38]. - The net debt ratio increased to 41.5% as of June 30, 2024, from 38.5% as of December 31, 2023, primarily due to an increase in net debt[38]. - Operating cash flow for the six months ended June 30, 2024, was RMB 137,303,000, down from RMB 234,880,000 in 2023, indicating a decline of about 41.4%[48]. - The total assets as of June 30, 2024, amounted to RMB 8,947.303 million, an increase from RMB 8,126.792 million as of December 31, 2023, representing a growth of about 10.1%[45]. Employee and Management Information - The company employed 63,396 employees as of June 30, 2024, up from 52,713 employees a year earlier, marking an increase of approximately 20.3%[43]. - The total employee cost for the six months ended June 30, 2024, was approximately RMB 158.24 million, compared to RMB 114.49 million for the same period in 2023, reflecting an increase of about 38.2%[43]. - The total remuneration paid to key management personnel was RMB 4,806,000 for the six months ended June 30, 2024, up from RMB 4,335,000 in the same period in 2023, indicating an increase of 10.9%[85]. Shareholder Structure and Governance - The company’s directors and senior management hold a total of 2,439,980,777 shares, representing approximately 68.60% of the issued share capital as of June 30, 2024[90]. - The major shareholder, Beikong Water Group, holds 1,478,312,777 shares, which accounts for 41.56% of the company's issued share capital[96]. - The concert party agreement includes multiple entities, with a total of 2,439,980,777 shares being collectively held, indicating significant shareholder alignment[94]. - The company emphasizes maintaining high levels of corporate governance to achieve sustainable development and enhance performance[107].

Financial Data and Key Metrics Changes - The dividend amount for 2024 remains consistent at 1.2 Hong Kong cents, with a dividend payout ratio of 30.2% [1] - Revenue for the city services segment in the first half of 2024 reached 2.4 billion, a 26% increase compared to 1.9 billion in the same period of 2023 [1] - The gross profit margin for city environmental governance services in the first half of 2024 was 22.4%, slightly down from 23.8% in the previous year [1] - Total assets increased to 8.95 billion in June 2024 from 8.12 billion in December 2023, reflecting an increase of 8.2% [1] Business Line Data and Key Metrics Changes - City services accounted for 89% of total revenue in 2024, up from 85% in 2023 [1] - The revenue from micro-waste services in the first half of 2024 was 230 million, a decrease of 15.1% from 270 million in the same period of 2023 [1] - The gross profit margin for micro-waste services dropped to 4.5% in the first half of 2024 from 20.3% in the previous year [1] Market Data and Key Metrics Changes - The total design processing capacity for regulated waste reached 70.8 million tons annually, with the company managing 224 city service projects across 25 provinces and regions [1] - The average processing price for hazardous waste in the first half of 2024 was 1,256 RMB per ton, down 17.6% from 1,524 RMB per ton in the same period of 2023 [1] Company Strategy and Development Direction - The company aims to enhance its regional organizational capabilities and improve cash flow management, focusing on timely service fee collections and reducing historical receivables [1] - The strategic focus includes separating city services and micro-waste segments, with an emphasis on digitalization and innovation to improve service quality and operational efficiency [1] Management's Comments on Operating Environment and Future Outlook - Management noted that the city services market is growing, with increasing government support for urban sanitation and environmental projects [1] - The micro-waste sector is facing challenges due to reduced demand from upstream industrial enterprises, leading to a cautious outlook for the second half of 2024 [1] Other Important Information - The company completed the acquisition of Chengmei Services, which is expected to enhance its market presence in Hong Kong [1] - Capital expenditures for 2024 were reported at 310 million, primarily for vehicle purchases [1] Q&A Session All Questions and Answers Question: Regarding the decline in gross margin for city services - Management acknowledged the impact of large project bids from the previous year on gross margins and expects improvements in the second half of 2024 as projects stabilize [1] Question: On the potential of Chengmei Services in Hong Kong - Management indicated that Chengmei will operate independently initially, with plans to enhance its market share in city services and property projects in Hong Kong [1] Question: Inquiry about operating cash flow and free cash flow - Operating cash flow has decreased compared to the previous year due to slower receivables collection, while investment cash outflows have also reduced as certain projects were completed [1]

Financial Performance - The group recorded revenue of approximately RMB 2.687769 billion for the six months ended June 30, 2024, representing an increase of about 20.2% compared to RMB 2.236208 billion for the same period in 2023[1]. - The profit attributable to shareholders for the six months ended June 30, 2024, was approximately RMB 128.499 million, a decrease of about 24.5% from RMB 170.153 million for the same period in 2023[2]. - Basic and diluted earnings per share for the six months ended June 30, 2024, were approximately RMB 3.61 cents, down from RMB 4.73 cents for the same period in 2023[2]. - Gross profit for the six months ended June 30, 2024, was RMB 556.846 million, compared to RMB 514.758 million for the same period in 2023[2]. - The net profit attributable to the owners of the parent company for the six months ended June 30, 2024, was RMB 202,121 thousand, up from RMB 188,938 thousand in the same period of 2023, indicating a growth of approximately 6.4%[14]. - The company reported a pre-tax profit of RMB 209,906 thousand for the six months ended June 30, 2024, down from RMB 264,730 thousand in the same period of 2023, showing a decline of about 20.7%[16]. - The company's total tax expense for the six months ended June 30, 2024, was RMB 58,485,000, a decrease of 13.0% compared to RMB 67,232,000 for the same period in 2023[20]. Dividends and Share Repurchase - The interim dividend declared for the six months ended June 30, 2024, was HKD 0.012 per share, with a payout ratio of approximately 30.2%[1]. - The company declared an interim dividend of HKD 0.012 per share, totaling approximately HKD 42,680,000 (equivalent to RMB 38,838,000), consistent with the previous year's dividend[22]. - The company repurchased 39,700,000 shares at a total cost of approximately HKD 22,569,000 (equivalent to RMB 20,746,000) during the six months ended June 30, 2024[31]. - The company repurchased a total of 39,700,000 ordinary shares at a total cost of HKD 22,569,180 during the reporting period, with the highest price per share being HKD 0.60 and the lowest being HKD 0.51[60]. Assets and Liabilities - Total assets as of June 30, 2024, amounted to RMB 8.947303 billion, an increase from RMB 8.126792 billion as of December 31, 2023[4]. - Current assets totaled RMB 5.009090 billion as of June 30, 2024, compared to RMB 4.285259 billion as of December 31, 2023[4]. - Current liabilities increased to RMB 3.218904 billion as of June 30, 2024, from RMB 2.593940 billion as of December 31, 2023[5]. - The net asset value as of June 30, 2024, was RMB 3.919887 billion, compared to RMB 3.852048 billion as of December 31, 2023[5]. - Trade receivables increased to RMB 3,005,114,000 as of June 30, 2024, compared to RMB 2,536,528,000 as of December 31, 2023, reflecting a growth of 18.4%[23]. - The company reported total bank borrowings of RMB 2,861,893,000 as of June 30, 2024, an increase of 11.7% from RMB 2,562,139,000 as of December 31, 2023[29]. - The company’s trade payables totaled RMB 593,951,000 as of June 30, 2024, up from RMB 437,062,000 as of December 31, 2023, indicating a rise of 36.0%[28]. - The net debt ratio increased to 41.5% as of June 30, 2024, from 38.5% as of December 31, 2023, primarily due to an increase in net debt[50]. Segment Performance - The company operates three reportable segments: urban services, hazardous waste treatment, and other services including electronic waste processing[9]. - Urban services recorded total revenue of approximately RMB 2.402 billion for the six months ended June 30, 2024, compared to RMB 1.907 billion for the same period in 2023, reflecting a 25.5% increase[41]. - The hazardous waste treatment business generated revenue of RMB 228,956,000, a decrease of 15.1% compared to RMB 269,688,000 in the previous year[32]. - The group recorded a net loss attributable to shareholders of RMB 33,128,000 for the hazardous waste treatment segment, compared to a profit of RMB 13,578,000 in the previous year[32]. - Revenue from hazardous waste treatment services decreased from RMB 269.7 million for the six months ended June 30, 2023, to RMB 228.96 million for the same period in 2024, a decline of 15.1%[43]. Operational Highlights - The company focuses on urban environmental governance services, hazardous waste treatment services, and electronic waste processing as its main business activities[9]. - The number of urban service projects increased to 224, with 186 in mainland China and 38 in Hong Kong as of June 30, 2024[35]. - The group secured 10 new urban service projects through public bidding, with a total contract value of approximately RMB 2.9 billion and estimated annual revenue of RMB 405.1 million[36]. - The group aims to expand its urban management capabilities by integrating various government services and developing a smart city management platform[35]. - The total contract value for the urban steward projects is over RMB 8 billion, with an annual service fee of approximately RMB 1.2 billion[36]. Expenses and Costs - Administrative expenses increased to RMB 282.2 million for the six months ended June 30, 2024, compared to RMB 211.5 million in the same period last year, driven by salary, wage, and office expense increases due to ongoing business expansion[48]. - The company’s financing costs for the six months ended June 30, 2024, amounted to RMB 55,846 thousand, compared to RMB 55,671 thousand in the same period of 2023, indicating a marginal increase of about 0.3%[18]. - The company’s depreciation and amortization expenses for the six months ended June 30, 2024, were RMB 285,799 thousand, compared to RMB 265,136 thousand in the same period of 2023, indicating an increase of approximately 7.8%[14]. Governance and Compliance - The financial data for the six months ended June 30, 2024, is unaudited but has been reviewed by the audit committee[6]. - The audit committee reviewed the interim results for the six months ended June 30, 2024, and confirmed that appropriate accounting policies were adopted and all applicable regulations were complied with[64]. - The company has adhered to the corporate governance code and principles, ensuring transparency and accountability in its operations[62]. - The company has not engaged in any vendor financing arrangements, thus the recent accounting standard revisions have no impact on the interim financial data[8]. Market and Economic Conditions - The company has not experienced any impact on its financial position or performance due to the adoption of revised Hong Kong Financial Reporting Standards[8]. - The company has no significant credit concentration risk due to a large and diversified customer base[24]. - The company has not adopted any derivative financial instruments to hedge its foreign currency risk, which may affect the group's net asset value due to fluctuations in exchange rates[55]. - There have been no significant events affecting the group from June 30, 2024, to the date of this announcement[61].

Financial Performance - Operating cash flow before tax profit increased to RMB 425,384 thousand in 2023, up from RMB 367,701 thousand in 2022, representing a growth of 15.7%[36] - Net cash flow from operating activities reached RMB 500,073 thousand in 2023, compared to RMB 418,729 thousand in 2022, indicating an increase of 19.4%[36] - The income tax expense decreased from RMB 96.2 million for the year ended December 31, 2022, to RMB 86.0 million for the year ended December 31, 2023, mainly due to tax exemptions granted to certain subsidiaries[113] - Other income and net gains increased to RMB 970 million for the year ended December 31, 2023, compared to RMB 710 million in the previous year, mainly due to increased government subsidies and VAT refunds[132] Assets and Liabilities - The company reported a total goodwill amount of approximately RMB 248 million from acquisitions in the urban services and hazardous waste management sectors[27] - The company’s consolidated financial position as of December 31, 2023, is detailed in the financial statements[71] - Total non-current liabilities decreased to RMB 1,680,804,000 in 2023 from RMB 2,050,732,000 in 2022, a reduction of about 18.0%[60] - Net asset value increased to RMB 3,852,048,000 in 2023, up from RMB 3,573,161,000 in 2022, reflecting an increase of approximately 7.8%[60] - Interest-bearing bank borrowings decreased to RMB 1,292,030,000 in 2023 from RMB 1,704,191,000 in 2022, a decrease of approximately 24.2%[60] Cash Flow and Investments - Cash flow used in investing activities amounted to RMB (690,842) thousand in 2023, compared to RMB (658,119) thousand in 2022, indicating an increase in cash outflow of 5%[36] - The cash inflow from the sale of property, plant, and equipment was RMB 80,284 thousand in 2023, compared to RMB 12,674 thousand in 2022, indicating a significant increase[36] - The cash and cash equivalents decreased by RMB 328.1 million, primarily due to the acquisition of property, plant, and equipment during the year[121] Corporate Governance - The company emphasizes maintaining high levels of corporate governance to achieve sustainable development and enhance corporate performance[19] - The company has complied with all applicable provisions of the corporate governance code as of the year ending December 31, 2023[19] Operational Efficiency - The company has established a framework for operational and management agreements to enhance business efficiency[14] - The group plans to focus on "regional deepening" and "coordinated development" strategies in 2024 to enhance market responsiveness and operational efficiency[126] - The group will establish a multi-dimensional collaborative management mechanism to enhance operational efficiency in key cooperative regions in 2024[127] Subsidiaries and Market Presence - The company has a total of 60 subsidiaries engaged in urban services, with varying ownership percentages[65] - The company continues to focus on expanding its urban services, with several new subsidiaries established in 2018[71] - The company has a 100% ownership stake in several subsidiaries focused on urban services and hazardous waste management, contributing significantly to its asset value[77] Financial Reporting and Compliance - The company’s independent auditor has confirmed the accuracy of the financial statements in accordance with Hong Kong Financial Reporting Standards[29] - The company is committed to enhancing its financial reporting processes and ensuring compliance with accounting standards[57] - The company adopted new and revised Hong Kong Financial Reporting Standards, which did not have a significant impact on the earnings per share for the years ended December 31, 2023, and 2022[84] Expenses and Costs - Administrative expenses increased to RMB 523.7 million for the year ended December 31, 2023, compared to RMB 408.3 million in the same period last year, primarily due to ongoing business expansion in urban services[133] - Financing costs rose to RMB 113,978 thousand in 2023, up from RMB 91,610 thousand in 2022, marking a 24.4% increase[36] - Financing costs increased due to higher interest on bank borrowings and rising market rates for overseas bank loans as of December 31, 2023[135] Trade and Receivables - Trade receivables increased due to the ongoing business expansion in urban services[118] - The net loss from trade receivables impairment decreased to RMB 11,000 thousand in 2023, down from RMB 33,000 thousand in 2022, showing a reduction of 66.7%[36] Inventory and Capital Expenditure - The total inventory increased by RMB 1,083,924 thousand in 2023, compared to an increase of RMB 921,539 thousand in 2022, representing a growth of 17.6%[36] - Total capital expenditure for the year ended December 31, 2023, was RMB 919.7 million, compared to RMB 741.4 million in 2022[92] - The increase in capital expenditure was allocated for the acquisition of property, plant, and equipment, among other assets[92] Financial Assets and Liabilities Management - The group manages financial assets to generate cash flows from either collecting contractual cash flows or selling financial assets, or both[165] - Financial assets measured at amortized cost are held within a business model aimed at collecting contractual cash flows, while those measured at fair value through other comprehensive income are held for both collecting cash flows and selling[166] - The group recognizes expected credit losses based on the difference between contractual cash flows due and expected cash flows, discounted at the original effective interest rate[170]

Financial Performance - The company recorded revenue of approximately RMB 5.057 billion for the year ended December 31, 2023, an increase of about 18.9% compared to RMB 4.253 billion for the year ended December 31, 2022[12]. - The profit attributable to shareholders for the year ended December 31, 2023, was approximately RMB 284.7 million, representing a 19.3% increase from RMB 238.6 million for the year ended December 31, 2022[12]. - Basic and diluted earnings per share for the year ended December 31, 2023, were approximately RMB 0.0791, compared to RMB 0.0663 for the year ended December 31, 2022[12]. - The total comprehensive income for the year ended December 31, 2023, was RMB 331.5 million, compared to RMB 252.6 million for the previous year[21]. - The net profit for the year ended December 31, 2023, was RMB 339.34 million, compared to RMB 271.50 million for the previous year, reflecting a significant increase[52]. - The company reported a pre-tax profit of RMB 425.38 million for the year ended December 31, 2023, up from RMB 367.70 million in the previous year[52]. - The company reported a net income of HKD 1,637,000 for the year ended December 31, 2023, with a significant increase from the previous year's loss of HKD 1,196,000[151]. - The company confirmed revenue of approximately RMB 196,300,000 from 52 urban service projects, with a total contract value of about RMB 5.4 billion and estimated annual revenue of RMB 1 billion[197]. Revenue Breakdown - The total revenue for urban environmental governance services increased by 17.3% to RMB 4,060,872,000 in 2023 from RMB 3,460,927,000 in 2022[63]. - The total revenue from hazardous waste treatment services rose to RMB 546,759,000 in 2023, a 3.8% increase from RMB 526,580,000 in 2022[66]. - Revenue from hazardous waste treatment services was RMB 314,480 thousand in 2023, slightly up from RMB 308,043 thousand in 2022, showing a growth of about 2.3%[154]. - The revenue from the sale of recycled products was RMB 232,279 thousand in 2023, up from RMB 218,537 thousand in 2022, representing an increase of about 6.3%[154]. - In 2023, the total revenue from urban services reached RMB 4,343,559,000, a 25.5% increase from RMB 3,460,927,000 in 2022[192]. Profitability Metrics - The gross profit for the year ended December 31, 2023, was RMB 1.022 billion, compared to RMB 865.7 million in 2022[14]. - The gross profit margin for urban environmental governance services improved to 22.0% in 2023, up from 21.8% in 2022[63]. - The gross profit margin for construction services was approximately 8.0% for the year ended December 31, 2023, compared to zero for the year ended December 31, 2022[57]. - The gross profit margin for harmless disposal projects declined to 17.7% in 2023 from 18.7% in 2022[69]. - The gross profit margin for urban services was 21.1% in 2023, slightly down from 21.8% in 2022, reflecting a 0.7% decrease[192]. Expenses and Costs - Administrative expenses increased to RMB 523,700,000 in 2023 from RMB 408,300,000 in 2022, primarily due to ongoing business expansion in urban services[80]. - The cost of goods sold decreased to RMB 325.52 million in 2023 from RMB 434.55 million in 2022, representing a decline of approximately 25.1%[93]. - The total employee benefits expenses increased to RMB 2.474 billion in 2023 from RMB 2.142 billion in 2022, reflecting a growth of about 15.5%[93]. - The company’s financing costs increased from RMB 28.97 million to RMB 61.33 million, indicating a rise in financial expenses[47]. - Financing costs increased to RMB 113,978,000 in 2023 from RMB 91,610,000 in 2022, attributed to higher interest on bank and other borrowings[79]. Assets and Liabilities - The company’s total assets as of December 31, 2023, were RMB 2.992 billion, consistent with the previous year[9]. - Non-current assets increased to RMB 3,841,533 thousand in 2023, up from RMB 3,610,628 thousand in 2022, representing a growth of 6.4%[29]. - Current assets totaled RMB 4,285,259 thousand in 2023, compared to RMB 4,085,697 thousand in 2022, reflecting an increase of 4.9%[29]. - Total assets reached RMB 8,126,792 thousand in 2023, a rise from RMB 7,696,325 thousand in 2022, marking an increase of 5.6%[29]. - Current liabilities rose to RMB 2,593,940 thousand in 2023, up from RMB 2,072,432 thousand in 2022, indicating a significant increase of 25.2%[30]. - The company’s non-current liabilities decreased to RMB 1,680,804 thousand in 2023 from RMB 2,050,732 thousand in 2022, a reduction of 18.1%[30]. - The net debt ratio rose to 38.5% as of December 31, 2023, compared to 29.7% in 2022, indicating an increase due to business expansion[111]. Dividends and Shareholder Returns - The company proposed a final dividend of HKD 0.015 per share, with a total annual dividend of HKD 0.027 and a payout ratio of approximately 30.7%[12]. - The board proposed a final dividend of HKD 0.015 per share for the year ended December 31, 2023, compared to HKD 0.01 in 2022[132]. - The company repurchased a total of 3,636,000 ordinary shares at a total cost of HKD 1,650,860 for the year ended December 31, 2023[133]. Operational Highlights - The company won 52 new urban service projects through public bidding in 2023, with a total contract value and estimated annual revenue of approximately RMB 5.4 billion and RMB 1 billion, respectively[12]. - The actual processing volume of harmless disposal projects increased from 186,269 tons for the year ended December 31, 2022, to 230,027 tons for the year ended December 31, 2023[58]. - The company has been involved in various activities including urban services and hazardous waste treatment, indicating a focus on expanding its service offerings[37]. - The company has eight operational harmless disposal projects as of December 31, 2023, primarily located in Shandong and Jiangsu provinces[58]. - The design processing capacity for harmless treatment projects increased to 423,366 tons per year in 2023, up from 351,016 tons in 2022[200]. Future Outlook - The group plans to focus on "regional deep cultivation" and "coordinated development" strategies in 2024 to enhance market responsiveness[107]. - The group managed over 100 urban service projects nationwide, providing a solid foundation for horizontal and vertical expansion[113].

Financial Performance - The group recorded revenue of approximately HKD 25.411 billion for the six months ended June 30, 2023, representing an increase of about 6.1% compared to the same period last year[71]. - The profit attributable to shareholders for the period was approximately HKD 1.934 billion, reflecting a year-on-year increase of about 20.5%[71]. - The company's revenue for the six months ended June 30, 2023, was HKD 2,541,144,000, an increase of 6.1% compared to HKD 2,394,883,000 for the same period in 2022[179]. - The net profit for the period was HKD 224,429,000, representing a 27.0% increase from HKD 176,909,000 in the prior year[179]. - The total comprehensive income for the period was HKD 26,757,000, compared to a loss of HKD 7,990,000 in the same period of 2022[181]. Revenue Breakdown - The group's revenue for environmental sanitation services reached HKD 2,166,830,000, a 12.7% increase from HKD 1,922,785,000 in the previous year, with a gross margin improvement from 21.7% to 23.8%[96]. - The hazardous waste treatment segment generated revenue of HKD 306,463,000, a slight increase of 1.4% compared to HKD 302,134,000, with a gross margin increase from 17.0% to 20.3%[96]. - The revenue from the electronic waste treatment business was approximately HKD 67,851,000, a significant decrease of 60.1% from HKD 169,964,000, representing about 2.7% of total revenue[102]. - Total revenue from environmental hygiene services reached HKD 2.1668 billion for the six months ended June 30, 2023, compared to HKD 1.9228 billion for the same period in 2022, with an increase in the number of service projects from 134 to 152[140]. Shareholder Information - The total issued share capital remained at 3,600,000,000 shares with a par value of HKD 0.1 per share as of June 30, 2023[36]. - The company has a significant shareholder, Beikong Water Group, holding 1,478,312,777 shares, which accounts for approximately 41.06% of the total issued shares[31]. - The company has a significant shareholder, Beijing Holdings, which holds approximately 41.12% of the issued share capital[49]. - The proposed interim dividend is HKD 0.012 per share, with a dividend payout ratio of approximately 22.3%[71]. Assets and Liabilities - As of June 30, 2023, total assets amounted to HKD 8,311,655 thousand, a decrease from HKD 8,743,544 thousand as of December 31, 2022, representing a decline of approximately 4.9%[162]. - Current liabilities decreased to HKD 1,897,937 thousand from HKD 2,355,034 thousand, reflecting a reduction of about 19.4%[163]. - Non-current liabilities increased to HKD 2,372,558 thousand from HKD 2,330,377 thousand, indicating an increase of approximately 1.8%[163]. - The net asset value as of June 30, 2023, was HKD 4,041,160 thousand, slightly down from HKD 4,058,133 thousand as of December 31, 2022[163]. Cash Flow and Financing - The group’s cash and cash equivalents were approximately HKD 1.2822 billion as of June 30, 2023, down from HKD 1.601 billion as of December 31, 2022[136]. - The net cash flow from operating activities was HKD 288,390,000, up from HKD 272,305,000 in the previous year, reflecting a growth of 5.9%[165]. - The company has entered into financing agreements with banks totaling HKD 800 million, with maturity dates ranging from June 2024 to September 2025[54]. - The net debt ratio increased to 35.0% as of June 30, 2023, compared to 29.7% as of December 31, 2022, due to an increase in net debt and a decrease in total equity[154]. Operational Efficiency - The group is transitioning from a "business-oriented" model to a "customer service-oriented" model to enhance internal collaboration and create value for customers[73]. - The group is enhancing brand management and improving its CRM system to establish a high-quality operational brand and professional image[74]. - The group aims to enhance service quality by meeting customized and high-standard service demands through research and innovative applications in its business areas[85]. - The group has implemented a comprehensive supply chain management system, significantly improving procurement and settlement efficiency through online approval processes[90]. Employee and Administrative Expenses - Total employee costs for the six months ended June 30, 2023, amounted to approximately HKD 1.301 billion, up from HKD 1.0407 billion for the same period in 2022, reflecting an increase in the number of employees from 50,436 to 52,713[156]. - Administrative expenses increased to HKD 240.4 million for the six months ended June 30, 2023, compared to HKD 220.0 million for the same period in 2022, primarily due to business expansion[129]. Strategic Initiatives - The company has established a technical service agreement with Beikong Water Group for waste treatment services, indicating a strategic partnership for operational efficiency[18]. - The company established a sustainability committee to oversee and report on the execution and effectiveness of its ESG management[104]. - The group is actively responding to national ecological civilization initiatives and adjusting its organizational structure to improve operational efficiency[85]. Market Environment - The overall market environment for hazardous waste treatment remains challenging, with traditional product prices remaining weak[73]. - The average selling price for harmless disposal projects decreased from HKD 2,144 per ton for the six months ended June 30, 2022, to HKD 1,732 per ton for the six months ended June 30, 2023, a decline of 19.2%[125]. - The average selling price of recycled products decreased from HKD 5,776 per ton to HKD 5,030 per ton, primarily due to changes in the sales mix and a decline in market prices for methanol and butanol[145].