Financial Performance - The company's main business revenue reached RMB 7.903 billion, an increase of 3.35% compared to 2020[15] - The net profit attributable to shareholders was RMB 511 million, marking an increase of approximately 9.83% compared to 2020[15] - The net profit for the year was RMB 573 million, representing a year-on-year increase of 15.57%[29] - The company's revenue for the year ended December 31, 2021, was RMB 7,902,604 thousand, an increase of 3.34% from RMB 7,646,659 thousand in 2020[198] - Gross profit for the same period was RMB 2,397,337 thousand, up from RMB 1,934,337 thousand, reflecting a growth of 24.0%[198] - The net profit for the year was RMB 573,139 thousand, representing an increase of 15.6% compared to RMB 495,922 thousand in 2020[198] - Basic and diluted earnings per share for the parent company's ordinary shareholders were RMB 3.57, compared to RMB 3.25 in the previous year, indicating a growth of 9.85%[198] - Administrative expenses increased to RMB 804,441 thousand from RMB 679,324 thousand, marking a rise of 18.4%[198] - The company reported a decrease in other income and gains, which fell to RMB 90,325 thousand from RMB 160,393 thousand, a decline of 43.6%[198] - Financing costs for the year were RMB 580,502 thousand, slightly up from RMB 554,713 thousand, indicating an increase of 4.6%[198] - The company's share of profits from joint ventures was RMB 54,553 thousand, an increase from RMB 39,758 thousand, reflecting a growth of 37.2%[198] - The income tax expense for the year was RMB 287,718 thousand, compared to RMB 281,365 thousand in 2020, showing a slight increase of 2.4%[198] Assets and Liabilities - Total assets exceeded RMB 26.173 billion, growing approximately 8.79% year-on-year[15] - Net assets surpassed RMB 7.717 billion, reflecting a growth of about 7.34% from the previous year[15] - The total waste processed amounted to 5.9225 million tons, while hazardous waste processed was 12,000 tons[43] - The group’s total assets as of December 31, 2021, were approximately RMB 26,173,239,000, with a net asset value attributable to owners of approximately RMB 6,210,896,000[52] - The debt-to-asset ratio increased slightly to 70.52% from 70.12% in 2020[52] - Cash and bank balances as of December 31, 2021, were approximately RMB 1,720,491,000, a decrease of about RMB 1,096,753,000 from RMB 2,817,244,000 at the end of 2020[53] - The group’s outstanding borrowings as of December 31, 2021, were approximately RMB 11,730,624,000, an increase of about RMB 3,013,478,000 from RMB 8,717,146,000 at the end of 2020[54] Environmental Initiatives - The company has implemented 69 environmental projects across over 20 provinces and cities in China, serving a population of over 60 million[15] - Total investment in these projects exceeded RMB 18.790 billion[15] - The company is committed to sustainable development and has been recognized as one of the top ten influential companies in China's solid waste industry[19] - The company is aligning with national strategies to promote green development and has set goals for carbon peak and carbon neutrality by 2030 and 2060, respectively[27] - The group emphasizes environmental management and has established policies to minimize adverse environmental impacts during operations[40] - The group has established a technology innovation management system and is advancing key research projects, including the development of low-emission technologies and waste treatment solutions[36] Strategic Focus - The company is focusing on a new strategic plan called "Ecology + 2025," integrating various business sectors for enhanced synergy[15] - The company aims to enhance its core competitiveness through technology-driven innovation[15] - The company is committed to expanding its market presence and optimizing its business structure[15] - The company is actively pursuing a "four precision" strategy to improve management in cost, capital, and safety[15] - The company aims to enhance operational efficiency and project conversion rates by expanding its project information database[29] - The group plans to focus on high-quality projects and systematic development in the regions where it operates[49] Corporate Governance - The company has maintained compliance with the corporate governance code as per the Hong Kong Stock Exchange's listing rules throughout the year ending December 31, 2021[75] - The board consists of three executive directors, one non-executive director, and three independent non-executive directors, ensuring a balanced governance structure[78] - The company emphasizes diversity in its board composition, considering factors such as gender, age, and professional experience to support strategic goals[77] - The company is committed to high standards of corporate governance, which it views as critical to its success[75] - The board is responsible for setting strategic direction and overseeing management performance, ensuring alignment with business objectives[77] - The company has a structured approach to internal controls and risk management, which is essential for sustainable development[77] - The management team has been involved in various environmental projects, indicating a focus on sustainability and market expansion[71] Risk Management - The company emphasizes the importance of risk management and internal control systems to identify and manage significant risks[106] - The board is responsible for establishing and maintaining effective risk management and internal control systems[106] - The company aims to ensure compliance with relevant laws and regulations through its internal control systems[105][106] - The company has a structured risk governance framework to enhance internal control effectiveness[106] - The company has established a comprehensive internal control system to enhance governance standards, aligning with regulatory requirements[112] Audit and Compliance - The consolidated financial statements for the year ended December 31, 2021, have been audited by Ernst & Young, confirming compliance with Hong Kong Financial Reporting Standards[176] - The audit opinion states that the financial statements present a true and fair view of the group's financial position as of December 31, 2021, and its financial performance for the year then ended[177] - Key audit matters include the accounting treatment of service concession arrangements related to waste management and energy business, which involve significant management judgments and estimates[181] - The auditor's procedures included reviewing contract terms of service concession arrangements and assessing the accounting model adopted by the group[181] - The auditor evaluated the future guaranteed receipts and current market rates for engineering gross profit margins, comparing them with observable market data and industry peers[181] Shareholder Relations - The company is committed to improving investor relations through regular communication with institutional investors, analysts, and shareholders[125] - The board confirmed that financial statements for the year ended December 31, 2021, were prepared in accordance with applicable laws and listing rules, ensuring accurate reflection of the group's financial position[127] - The company did not recommend the declaration of a final dividend for the year ended December 31, 2021, consistent with the previous year[134] - The company has no distributable reserves as of December 31, 2021[137] - The board aims to provide continuous returns to shareholders while retaining sufficient reserves for future development[135]

Capital Environment Holdings Limited 首創環境控股有限公司 (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立之有限公司) Banks of - 股票优酷 - eases Stock Code 股票代號 : 03989 目 錄 2 公司資料 3 管理層討論與分析 9 中期簡明合併財務報表審閱報告 10 中期財務報告 中期簡明合併損益表 中期簡明合併全面收益表 中期簡明合併財務狀況報表 中期簡明合併股本權益變動表 中期簡明合併現金流量表 中期簡明合併財務資料附註 41 權益披露及其他資料 公司資料 | --- | --- | |-------------------------|--------------------------------| | | | | 董事會 | 總辦事處及主要營業地點 | | 執行董事 | 香港 | | 曹國憲先生 （主席） | 中環夏愨道 12 號 | | 李伏京先生 （行政總裁） | 美國銀行中心 | | 肖煜坤先生 | 16 樓 | | 非執行董事 | ...

Capital Environment Holdings Limited (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立之有限公司) Stock Code 股票代號 : 03989 Annual Report =報/ 目 錄 3 公司資料 5 主席的話 9 管理層討論與分析 15 董事會及高級管理層 19 企業管治報告 32 董事會報告 39 獨立核數師報告 45 年度財務報告 合併損益表 合併全面收益表 合併財務狀況報表 合併股本權益變動表 合併現金流量表 財務報表附註 154 財務摘要 公司 賓斯 ps IN 3 200 公司資料 | --- | --- | |-------------------------------------------|------------------------------| | 董事會 | 總辦事處及主要營業地點 | | 執行董事 | 香港 | | 曹國憲先生 （主席） | 中環夏愨道 12 號 | | 李伏京先生 （行政總裁） | 美國銀行中心 | | 郝春梅女士 | 16 ...

@ Capital Environment Holdings Limited 首創環境控股有限公司 (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立之有限公司) Stock Code 股票代號：03989 Interim Report 中期報告 ▲ 目 錄 2 公司資料 3 管理層討論及分析 8 中期簡明合併財務報表審閱報告 9 中期財務報告 中期簡明合併損益表 中期簡明合併全面收益表 中期簡明合併財務狀況報表 中期簡明合併股本權益變動表 中期簡明合併現金流量表 中期簡明合併財務資料附註 39 權益披露及其他資料 公司資料 | --- | --- | |-------------------------------------------|----------------------------------------------| | | | | 董事會 | 總辦事處及主要營業地點 | | 執行董事 | 香港 | | 曹國憲先生 （主席） | 中環夏愨道 12 號 | | 李伏京先生 （行政總裁） | 美國銀行中心 ...

[Company Information](index=4&type=section&id=Company%20Information) This chapter outlines Shougang Environment Holdings Limited's registration, main offices, board members, committee structure, auditor, legal counsel, and principal bankers [Company Basic Information](index=4&type=section&id=Company%20Basic%20Information) This section provides fundamental company details including registration in the Cayman Islands, main offices in Hong Kong, board composition, and key professional service providers - Company registered in the Cayman Islands with stock code **03989**, and its head office and principal place of business are located in Central, Hong Kong[1](index=1&type=chunk)[7](index=7&type=chunk) - The Board of Directors comprises executive directors (including Chairman Mr. Cao Guoxian and CEO Mr. Li Fujing) and independent non-executive directors, with established audit, nomination, and remuneration committees[7](index=7&type=chunk) - Ernst & Young serves as the company's auditor, and principal bankers include Bank of China (Hong Kong) Limited and The Hongkong and Shanghai Banking Corporation Limited[7](index=7&type=chunk) [Chairman's Statement](index=6&type=section&id=Chairman's%20Statement) The Chairman's statement reviews the company's performance and strategic direction [2019 Operating Environment and Company Performance](index=6&type=section&id=2019%20Operating%20Environment%20and%20Company%20Performance) The Chairman reviews 2019's global economic challenges and China's environmental industry opportunities, highlighting the company's expansion and significant growth in revenue and total assets - Despite global economic volatility in 2019, China's green environmental industry emerged as a new economic growth driver, supported by continuous favorable government policies[12](index=12&type=chunk)[14](index=14&type=chunk) - The Group continued its expansion in the environmental sector, successfully securing **15** waste treatment projects with a total investment of approximately **RMB 4.73 billion**, adding a new designed annual municipal solid waste treatment capacity of **3.42 million tons**[15](index=15&type=chunk) 2019 Key Financial Indicators YoY Growth | Indicator | 2019 Amount (RMB) | YoY Growth Rate | | :------------------- | :---------------- | :-------------- | | Main Business Revenue | 5.938 billion | 27.75% | | Total Assets | 18.636 billion | 25.19% | | Net Assets | 5.241 billion | 9.10% | - As of the end of 2019, the Group's projects covered over **20** provinces and municipalities in China, and expanded to the New Zealand market, with **78** environmental projects implemented domestically, totaling over **RMB 20.6 billion** in investment[15](index=15&type=chunk) [Future Outlook and Social Responsibility](index=8&type=section&id=Future%20Outlook%20and%20Social%20Responsibility) The company will continue its "Eco+" strategy, promote solid waste business integration, develop asset-light models, and ensure stable operations amidst the COVID-19 pandemic - The Group will be guided by the "Eco+" development strategy to achieve vertical and horizontal integration across different solid waste business segments, accelerate momentum transformation, and fully develop an asset-light business model[18](index=18&type=chunk) - Following the outbreak of the novel coronavirus pandemic at the end of 2019, the company coordinated production and pandemic prevention efforts, ensuring all personnel worked together for stable and orderly production and operations[18](index=18&type=chunk) - The company will continue to implement pandemic prevention requirements, comprehensively manage operations, strive for high-quality development, and consider improving national environmental protection as its responsibility[18](index=18&type=chunk)[19](index=19&type=chunk) [Management Discussion and Analysis](index=10&type=section&id=Management%20Discussion%20and%20Analysis) Management discusses the company's operational and financial performance, strategic achievements, and future outlook [Business Review and Outlook](index=10&type=section&id=Business%20Review%20and%20Outlook) Management reviews 2019's business expansion, market achievements, technological innovation, and financial performance, outlining future development strategies - In 2019, China's green economy and environmental industry became new drivers of economic development, and the company actively aligned with national strategies, focusing on value creation[24](index=24&type=chunk)[26](index=26&type=chunk) 2019 Operating Performance Overview | Indicator | 2019 Amount (RMB) | YoY Growth Rate | | :----------------------------- | :---------------- | :-------------- | | Total Assets | 18.636 billion | 25.19% | | Operating Revenue | 5.938 billion | 27.75% | | Profit for the Year | 426 million | 37.1% | | Net Profit Attributable to Parent | 303 million | 65.68% | - The Group has **78** domestic projects in reserve, with a total investment of approximately **RMB 20.6 billion**, and a total designed capacity of approximately **17.22 million tons** per year for waste treatment and approximately **3.2 million units** per year for dismantling electrical and electronic equipment[27](index=27&type=chunk) - Successfully secured **15** waste treatment projects with a total investment of approximately **RMB 4.7 billion**, adding a new designed annual municipal solid waste treatment capacity of **3.42 million tons**, covering the complete industry chain including municipal solid waste sweeping, collection, transportation, landfill, incineration for power generation, anaerobic treatment, and hazardous waste disposal[28](index=28&type=chunk)[29](index=29&type=chunk) - In terms of technological innovation, Beijing Capital Environment Technology Co., Ltd., a wholly-owned subsidiary, was awarded the title of "China Strategic Emerging Environmental Industry Leading Enterprise" for two consecutive years and applied for over **30** patents[29](index=29&type=chunk) - Regarding engineering construction, in 2019, **20** projects were under construction and **7** projects were in preparation for implementation, with **3** projects completed and put into operation, and **16** projects steadily under construction[30](index=30&type=chunk) - In terms of operational management, **35** projects were in operation or trial operation, achieving an annual municipal solid waste treatment volume of **3.968 million tons**, hazardous waste treatment volume of **0.008 million tons**, dismantling volume of **3.14 million units**, and providing **316 million kWh** of grid-connected electricity[30](index=30&type=chunk) - In market financing, the Group obtained a domestic **AA+** corporate credit rating, approved the issuance of Panda bonds and super short-term financing, and secured **RMB 2.4 billion** in working capital credit and approximately **RMB 1.8 billion** in fixed asset loan credit[32](index=32&type=chunk) - In the overseas market, the Group holds a **51%** stake in BCG NZ Investment Holding Limited, which is New Zealand's largest waste management service provider with a market share of nearly **40%**[32](index=32&type=chunk) - Looking ahead, the Group aims to add no less than **7,000 tons/day** of solid waste treatment capacity and will continue to study global funding and capital market trends, utilizing diverse financing methods[34](index=34&type=chunk) [Financial Review](index=14&type=section&id=Financial%20Review) This section reviews the Group's 2019 financial performance, including revenue growth, profit increase, rising finance costs, asset-liability status, and cash flow changes 2019 Financial Performance Overview | Indicator | 2019 Amount (RMB) | 2018 Amount (RMB) | YoY Growth Rate | | :-------------------------------------- | :---------------- | :---------------- | :-------------- | | Revenue from Waste Treatment and Waste-to-Energy Businesses | 5.938 billion | 4.648 billion | 27.75% | | Profit Attributable to Owners | 303 million | 183 million | 65.68% | | Finance Costs | 436 million | 310 million | 40.50% | - The increase in profit was primarily due to enhanced operational project management, improved operational efficiency, a significant increase in operating revenue, and accelerated construction projects driving growth in construction service revenue[37](index=37&type=chunk) - Total assets were approximately **RMB 18.636 billion**, with an asset-liability ratio of **71.88%**, an increase of **3.88%** from 2018, mainly due to increased funding requirements for new projects[38](index=38&type=chunk) - Cash and bank balances were approximately **RMB 1.601 billion**, a decrease of approximately **RMB 0.811 billion** from 2018, mainly due to increased capital expenditures as various projects commenced construction[40](index=40&type=chunk) - Outstanding borrowings were approximately **RMB 7.331 billion**, an increase of approximately **RMB 1.496 billion** from 2018, with fixed-rate borrowings accounting for approximately **58%** and floating-rate borrowings for approximately **42%**[41](index=41&type=chunk) - As of December 31, 2019, the Group employed approximately **4,547** employees, primarily located in mainland China, Hong Kong, and New Zealand[46](index=46&type=chunk) [Board of Directors and Senior Management](index=16&type=section&id=Board%20of%20Directors%20and%20Senior%20Management) This section introduces the company's board of directors and senior management, outlining their backgrounds, qualifications, and key responsibilities [Biographies of Directors](index=16&type=section&id=Biographies%20of%20Directors) This section introduces the backgrounds, qualifications, and key responsibilities of the company's executive and independent non-executive directors, highlighting their extensive experience - Mr. Cao Guoxian was re-designated as Executive Director and Chairman of the Board on November 25, 2019, possessing extensive experience in domestic and international investment and financing businesses[48](index=48&type=chunk) - Mr. Li Fujing was appointed Executive Director and Chief Executive Officer in November 2019, with rich experience in corporate management, operations, investment, financing, and risk management[48](index=48&type=chunk) - Independent Non-executive Directors Mr. Pu Bingrong, Mr. Zheng Qitai, and Dr. Chen Qihua possess extensive experience in urban planning, accounting, finance, and corporate governance[51](index=51&type=chunk)[52](index=52&type=chunk) [Biographies of Senior Management](index=17&type=section&id=Biographies%20of%20Senior%20Management) This section introduces the backgrounds and key responsibilities of the company's senior management, covering various departments from corporate management to legal affairs - Mr. Gu Jinshan is responsible for corporate management; Ms. Liu Jing is responsible for the International Business Department and Hazardous Waste Industry Department; Mr. Liu Yan Jun is responsible for the company's strategy, capital markets, and board management[53](index=53&type=chunk)[55](index=55&type=chunk) - Mr. Xu Jinjun has nearly two decades of experience in the environmental sector, responsible for the operation and management of technology, engineering, and the Southern Investment Center[56](index=56&type=chunk) - Mr. Yan Shengli is responsible for and oversees the Operations Center and Legal Affairs; Mr. Hu Zaichun is responsible for the investment, construction, and operation management of the anaerobic treatment industry[57](index=57&type=chunk)[58](index=58&type=chunk) - Ms. Wang Bingni serves as the Company Secretary, with over two decades of experience in company secretarial matters, internal control, and financial management for Hong Kong listed companies[60](index=60&type=chunk) [Corporate Governance Report](index=20&type=section&id=Corporate%20Governance%20Report) This report details the company's corporate governance framework, board operations, committee functions, and commitment to high standards [Corporate Governance Framework and Board Operations](index=20&type=section&id=Corporate%20Governance%20Framework%20and%20Board%20Operations) The company maintains high corporate governance standards, with the Board responsible for strategy, management oversight, and ensuring director diversity, detailing meeting attendance and training - The company complied with all code provisions of the Corporate Governance Code in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited throughout 2019[62](index=62&type=chunk) - The Board's primary responsibilities include formulating the Group's strategic direction, setting objectives and business development plans, monitoring the performance of senior management, and being responsible for corporate governance[64](index=64&type=chunk) - The Board comprises four executive directors and three independent non-executive directors, ensuring diversity by considering factors such as gender, age, cultural and educational background, professional experience, skills, and knowledge[65](index=65&type=chunk) 2019 Board Meeting and General Meeting Attendance | Director Name | Board Meetings Attended/Held | General Meetings Attended/Held | | :----------------- | :--------------------------- | :----------------------------- | | Mr. Cao Guoxian | 8/10 | 1/1 | | Mr. Li Fujing | 1/1 | 0/0 | | Mr. Cheng Jialin | 8/10 | 1/1 | | Ms. Hao Chunmei | 9/10 | 1/1 | | Mr. Pu Bingrong | 10/10 | 1/1 | | Mr. Zheng Qitai | 10/10 | 1/1 | | Dr. Chen Qihua | 10/10 | 1/1 | - All directors participated in continuous professional development activities through training and/or reading relevant materials to update their knowledge and skills[71](index=71&type=chunk) [Board Committees and Auditor's Remuneration](index=23&type=section&id=Board%20Committees%20and%20Auditor's%20Remuneration) This section outlines the responsibilities, composition, and meeting details of the Nomination, Remuneration, and Audit Committees, along with auditor's remuneration for services - The Nomination Committee is responsible for reviewing the Board's structure, identifying suitable director candidates, assessing the independence of independent non-executive directors, and making recommendations on director succession planning[76](index=76&type=chunk)[80](index=80&type=chunk) - The Remuneration Committee is responsible for making recommendations on the remuneration policy and structure for directors and senior management, approving the terms of executive directors' service contracts, and determining specific remuneration packages[84](index=84&type=chunk) - The Audit Committee, composed of three independent non-executive directors, is responsible for considering the appointment of auditors, reviewing financial information, and overseeing risk management and internal control systems[88](index=88&type=chunk)[90](index=90&type=chunk) 2019 Auditor's Remuneration | Service Type | Amount (RMB Thousand) | | :-------------- | :-------------------- | | Audit Services | 4,356 | | Non-audit Services | 2,337 | | **Total** | **6,693** | [Risk Management and Internal Control](index=27&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for the effectiveness of risk management and internal control systems, defining roles for the Board, management, and internal audit, and detailing risk identification and management procedures - The Board is responsible for determining the nature and extent of risks acceptable to the company, ensuring the establishment and maintenance of appropriate and effective risk management and internal control systems[93](index=93&type=chunk)[94](index=94&type=chunk) - Management is responsible for detailed risk identification and management, developing daily operational process management guidelines, and executing internal control workflows and self-assessments[96](index=96&type=chunk) - The Internal Audit Department and Corporate Management Department are responsible for leading internal control construction, risk assessment, compiling a risk database, formulating risk-oriented internal audit work plans, and reporting results to the Audit Committee[96](index=96&type=chunk) - The company has established policies for handling and disseminating inside information and regularly reminds directors and employees to comply with relevant policies[103](index=103&type=chunk) - In 2019, the company established a Legal Construction Leading Group and its subordinate Legal Construction Committee to ensure a **100%** legal review rate for contracts, systems, and major decisions[104](index=104&type=chunk) [Shareholder Rights and Investor Relations](index=30&type=section&id=Shareholder%20Rights%20and%20Investor%20Relations) This section details procedures for shareholders to convene extraordinary general meetings, propose resolutions, nominate directors, and inquire with the Board, emphasizing active investor communication - Shareholders holding not less than one-tenth of the paid-up share capital can request an extraordinary general meeting and may convene it themselves if the Board fails to do so within **21** days[108](index=108&type=chunk) - Shareholders can contact the Company Secretary via the phone number, email address on the company website, or at the principal place of business in Hong Kong to make inquiries to the Board[111](index=111&type=chunk) - The company maintains close communication channels with media, analysts, and fund managers through one-on-one meetings, roadshows, and conferences to ensure investors are informed of the company's latest developments[112](index=112&type=chunk) - Directors confirm responsibility for preparing the financial statements for each financial year, ensuring they truly and fairly reflect the Group's financial position, performance, and cash flows, and comply with relevant laws and Listing Rules disclosure requirements[116](index=116&type=chunk) [Directors' Report](index=33&type=section&id=Directors'%20Report) This report provides an overview of the company's business, financial performance, board composition, shareholder interests, and related party transactions [Business Overview and Financial Performance](index=33&type=section&id=Business%20Overview%20and%20Financial%20Performance) This section outlines the company's core business in waste treatment and waste-to-energy projects, confirms 2019 results, discusses dividend policy, and details financial summaries and capital changes - The company is an investment holding company, primarily engaged in providing waste treatment technologies and services, focusing on waste-to-energy projects[121](index=121&type=chunk) - The Board does not recommend declaring a final dividend for the year ended December 31, 2019[123](index=123&type=chunk) - The dividend policy considers various factors, including the Group's financial performance, working capital needs, capital expenditures, liquidity position, debt-to-equity ratio, and economic and political conditions[123](index=123&type=chunk) - The company had no distributable reserves as of December 31, 2019[125](index=125&type=chunk) - In 2018, notes with a total principal amount of **US$300 million** bearing **5.625%** interest were issued, due in 2021, with proceeds used for financing or refinancing eligible green assets and projects[131](index=131&type=chunk) [Board and Shareholder Interests](index=34&type=section&id=Board%20and%20Shareholder%20Interests) This section lists directors, confirms independent non-executive directors' independence, discloses directors' and major shareholders' interests in shares, and states the absence of share option schemes - The list of directors during the year and up to the report date includes Executive Directors Mr. Cao Guoxian (Chairman), Mr. Li Fujing (CEO), and Independent Non-executive Directors Mr. Pu Bingrong, Mr. Zheng Qitai, and Dr. Chen Qihua[134](index=134&type=chunk) - The company has received annual confirmations of independence from each independent non-executive director and considers them all to be independent[134](index=134&type=chunk) - As of December 31, 2019, no director, chief executive, or their associates had any registrable interests or short positions in the company's shares, underlying shares, or debentures[142](index=142&type=chunk) 2019 Major Shareholder Holdings | Shareholder Name | Capacity | Number of Shares/Underlying Shares | Approximate Percentage of Shareholding | | :------------------------------- | :------------------- | :--------------------------------- | :------------------------------------- | | Capital (Hong Kong) Limited | Beneficial Owner | 6,449,026,736 (L) | 45.11% | | Beijing Capital Co., Ltd. | Controlled Corporation Interest | 6,449,026,736 (L) | 45.11% | | Capital Huaxing International Investment Co., Ltd. | Beneficial Owner | 3,116,767,072 (L) | 21.80% | | Beijing Capital Group Co., Ltd. | Controlled Corporation Interest | 9,565,793,808 (L) | 66.92% | - Currently, the company has no effective share option scheme[143](index=143&type=chunk) [Connected Transactions and Other Disclosures](index=37&type=section&id=Connected%20Transactions%20and%20Other%20Disclosures) This section discloses connected transactions, including joint venture formation and corporate financing guarantees, confirms compliance with Listing Rules, and reports on public float, key customers/suppliers, and ESG reporting - The company's wholly-owned subsidiary, Capital Investment, formed a joint venture, Hebei Xiong'an Capital Environmental Governance Co., Ltd., with Beijing Capital Co., Ltd., with Capital Investment holding a **49%** equity stake[148](index=148&type=chunk) - Beijing Capital Group provided corporate financing guarantee services to Capital Investment, with the Group owing approximately **RMB 6 million** in guarantee fees for the year ended December 31, 2019[149](index=149&type=chunk) - Sales to the Group's top five customers accounted for **25.98%** of total sales for the year, with the largest customer accounting for **5.62%**; purchases from the top five suppliers accounted for **10.6%** of total purchases, with the largest supplier accounting for **2.98%**[155](index=155&type=chunk) - Neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities during the current year[157](index=157&type=chunk) - The Environmental, Social and Governance Report will be uploaded to the company's website and the HKEX website by the end of May 2020[160](index=160&type=chunk) [Independent Auditor's Report](index=40&type=section&id=Independent%20Auditor's%20Report) This report presents the independent auditor's opinion on the consolidated financial statements, key audit matters, and responsibilities of directors and auditors [Audit Opinion and Basis](index=40&type=section&id=Audit%20Opinion%20and%20Basis) Independent auditor Ernst & Young issued an unmodified opinion on the consolidated financial statements, affirming they fairly present the Group's financial position, performance, and cash flows in accordance with HKFRSs - The auditor believes that the consolidated financial statements fairly present, in all material respects, the Group's consolidated financial position as of December 31, 2019, and its consolidated financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA[163](index=163&type=chunk) - The audit was conducted in accordance with Hong Kong Standards on Auditing issued by the HKICPA, and the auditor is independent of the Group and has fulfilled its ethical responsibilities[164](index=164&type=chunk) [Key Audit Matters](index=40&type=section&id=Key%20Audit%20Matters) The auditor identified three key audit matters: accounting for service concession arrangements, impairment of franchise financial assets, and impairment of goodwill and indefinite-lived intangible assets, all involving significant management judgment - The accounting treatment for service concession arrangements involves significant management judgment and estimates, including determining the applicable accounting model, estimating future guaranteed receipts, current market rates for construction gross margin, discount rates, and the percentage of completion for construction services[167](index=167&type=chunk) - The impairment of franchise financial assets is a key audit matter due to its materiality and the level of judgment involved, as management recognizes expected credit loss provisions based on historical credit loss experience and adjusted forward-looking factors[170](index=170&type=chunk) - The impairment test for goodwill and indefinite-lived intangible assets is performed annually and involves a high degree of judgment, based on assumptions such as future revenue growth rates, operating profit margins, perpetual growth rates, and discount rates[172](index=172&type=chunk) [Responsibilities of Directors and Auditor](index=43&type=section&id=Responsibilities%20of%20Directors%20and%20Auditor) This section defines the responsibilities of the company's directors for preparing and presenting consolidated financial statements and the auditor's responsibilities for auditing them, including obtaining reasonable assurance and assessing risks - The company's directors are responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance, and for ensuring effective internal controls[177](index=177&type=chunk) - The auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audit opinion[179](index=179&type=chunk) - The auditor needs to identify and assess the risks of material misstatement, understand internal controls, evaluate accounting policies and estimates, and conclude on the going concern ability[179](index=179&type=chunk)[181](index=181&type=chunk) [Annual Financial Report](index=45&type=section&id=Annual%20Financial%20Report) This section contains the Group's consolidated financial statements for the year ended December 31, 2019, along with detailed notes [Consolidated Financial Statements](index=45&type=section&id=Consolidated%20Financial%20Statements) This section provides the consolidated statement of profit or loss, comprehensive income, financial position, changes in equity, and cash flows for the year ended December 31, 2019 2019 Consolidated Statement of Profit or Loss Key Data | Indicator | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :----------------------------- | :------------------ | :------------------ | | Revenue | 5,938,095 | 4,648,196 | | Gross Profit | 1,567,462 | 1,201,935 | | Profit for the Year | 425,895 | 310,645 | | Attributable to Owners of Parent | 302,749 | 182,733 | | Attributable to Non-controlling Interests | 123,146 | 127,912 | | Basic Earnings Per Share | RMB 2.12 cents | RMB 1.28 cents | 2019 Consolidated Statement of Financial Position Key Data | Indicator | December 31, 2019 (RMB Thousand) | December 31, 2018 (RMB Thousand) | | :----------------------------- | :------------------------------- | :------------------------------- | | Total Non-current Assets | 14,116,827 | 10,545,812 | | Total Current Assets | 4,519,053 | 4,340,221 | | Total Current Liabilities | 2,978,243 | 2,723,517 | | Total Non-current Liabilities | 10,416,383 | 7,358,598 | | Net Assets | 5,241,254 | 4,803,918 | | Total Equity | 5,241,254 | 4,803,918 | 2019 Consolidated Statement of Cash Flows Key Data | Indicator | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :-------------------------------------- | :------------------ | :------------------ | | Net Cash Used in Operating Activities | (706,940) | (101,395) | | Net Cash Used in Investing Activities | (1,042,559) | (1,274,959) | | Net Cash From Financing Activities | 941,558 | 2,891,377 | | Net Increase/(Decrease) in Cash and Cash Equivalents | (807,941) | 1,515,023 | | Cash and Cash Equivalents at Year End | 1,540,029 | 2,403,522 | [Notes to the Consolidated Financial Statements](index=53&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed notes to the consolidated financial statements, covering company information, accounting policies, significant judgments, segment information, revenue analysis, and financial risk management - The company's ultimate holding company is Beijing Capital Group Co., Ltd., a state-owned enterprise registered in the People's Republic of China[204](index=204&type=chunk) - The Group first adopted Hong Kong Financial Reporting Standard 16 (Leases) in this year's financial statements, adjusting the opening balance of retained earnings as of January 1, 2019, and recognizing **RMB 284,248,000** in right-of-use assets and **RMB 284,248,000** in lease liabilities[228](index=228&type=chunk)[235](index=235&type=chunk) - Management made significant judgments and estimates in applying accounting policies for service concession arrangements, tax provisions, goodwill and intangible asset impairment, expected credit loss provisions, construction project completion percentage, estimated useful lives and residual values of fixed assets and other intangible assets, and site restoration provisions[351](index=351&type=chunk)[356](index=356&type=chunk)[357](index=357&type=chunk)[358](index=358&type=chunk)[360](index=360&type=chunk)[362](index=362&type=chunk)[363](index=363&type=chunk) 2019 Operating Segment Revenue | Segment | Revenue from External Customers (RMB Thousand) | | :---------------------------------------- | :--------------------------------------------- | | Waste Treatment and Waste-to-Energy in China | 3,567,224 | | Waste Treatment and Waste-to-Energy in New Zealand | 2,370,871 | | **Total** | **5,938,095** | 2019 Revenue from Contracts with Customers Breakdown | Revenue Source | 2019 (RMB Thousand) | | :-------------------------------------------- | :------------------ | | Construction Services under Service Concession Arrangements | 2,318,307 | | Operation Services under Service Concession Arrangements | 451,804 | | Dismantling of Electrical Appliances | 442,189 | | Waste Collection Services | 1,521,144 | | Waste Landfill Services | 493,746 | | Recycling | 107,953 | | Technical Services | 243,580 | | Others | 173,985 | | Actual Interest Income from Franchise Financial Assets | 185,387 | | **Total Revenue** | **5,938,095** | - Profit before tax for the year ended December 31, 2019, was net of depreciation of **RMB 247,029,000** and depreciation of right-of-use assets of **RMB 49,278,000**[382](index=382&type=chunk) - Total directors' remuneration in 2019 amounted to **RMB 3,790,000**, comprising **RMB 831,000** in fees and **RMB 2,959,000** in salaries, allowances, and benefits in kind[385](index=385&type=chunk) - The total remuneration for the five highest-paid individuals in 2019 was **RMB 15,959,000**, including **RMB 9,885,000** in salaries, allowances, and benefits in kind, and **RMB 5,609,000** in performance bonuses[391](index=391&type=chunk) - Total tax expense in 2019 was **RMB 208,131,000**; some Chinese subsidiaries enjoyed tax benefits, being exempt from income tax or enjoying preferential tax rates[392](index=392&type=chunk)[396](index=396&type=chunk) - Basic earnings per share was **RMB 2.12 cents**, calculated based on profit for the year attributable to ordinary equity holders of the parent of **RMB 302,749,000** and a weighted average of **14,294,733,167** ordinary shares outstanding[402](index=402&type=chunk)[404](index=404&type=chunk) - The net book value of property, plant and equipment as of December 31, 2019, was **RMB 2,272,692,000**, and the net book value of prepaid lease payments for land was **RMB 103,089,000**[407](index=407&type=chunk)[409](index=409&type=chunk) - Following the adoption of HKFRS 16, the net book value of right-of-use assets was **RMB 1,240,099,000**, and the net book value of lease liabilities was **RMB 1,238,966,000**[411](index=411&type=chunk)[413](index=413&type=chunk) - The net book value of goodwill as of December 31, 2019, was **RMB 2,086,384,000**, primarily allocated to BCG NZ Group, Zhejiang Zhuoshang Environmental Energy Co., Ltd., and Mianyang Lubo Lubricating Oil Co., Ltd[416](index=416&type=chunk)[422](index=422&type=chunk) - The net book value of other intangible assets was **RMB 2,702,006,000**, including customer contracts, service concession arrangements, licenses and permits, trade names and trademarks, and software[429](index=429&type=chunk)[430](index=430&type=chunk) - Investments in joint ventures had a net book value of **RMB 451,469,000**, primarily including Transwaste Canterbury Limited[439](index=439&type=chunk) - Investments in associates had a net book value of **RMB 104,521,000**, primarily including Shenzhen Guangye Environmental Renewable Energy Co., Ltd[450](index=450&type=chunk) - Franchise financial assets had a net book value of **RMB 2,230,486,000**, primarily from construction and operation services for waste treatment and waste-to-energy plants in China[460](index=460&type=chunk) - Contract assets had a net book value of **RMB 3,420,812,000**, primarily from construction services, with **RMB 3,117,140,000** expected to be completed within one year[467](index=467&type=chunk)[468](index=468&type=chunk) - Trade receivables had a net book value of **RMB 1,301,954,000**, including **RMB 579,945,000** in dismantling subsidies receivable from the Chinese government[478](index=478&type=chunk)[481](index=481&type=chunk) - Cash and bank balances were **RMB 1,600,770,000**, and pledged deposits were **RMB 60,741,000**[486](index=486&type=chunk) - Total interest-bearing bank and other borrowings amounted to **RMB 7,330,823,000**, with **RMB 4,252,929,000** in fixed-rate borrowings and **RMB 3,077,894,000** in floating-rate borrowings[506](index=506&type=chunk)[513](index=513&type=chunk) - Notes payable had a net book value of **RMB 2,080,404,000**, bearing interest at an annual rate of **5.625%**, and are redeemable on September 10, 2021[514](index=514&type=chunk)[516](index=516&type=chunk) - Total contingent liabilities were **RMB 356,556,000**, primarily guarantees to the government for ongoing landfill operations and the fulfillment of waste collection contracts[535](index=535&type=chunk) - Total capital commitments were **RMB 3,999,061,000**, mainly for construction projects under service concession arrangements and the acquisition of property, plant, and equipment[539](index=539&type=chunk) - Related party transactions included guarantee fees, rental expenses, interest expenses, and keepwell fees with Beijing Capital Group entities, as well as construction and operation service revenue with other government-related entities[543](index=543&type=chunk)[549](index=549&type=chunk) - The Group primarily faces interest rate risk, foreign currency risk (New Zealand Dollar, US Dollar, and Hong Kong Dollar against RMB), and liquidity risk, which are managed by combining fixed and variable rate debt and monitoring funding shortfalls[586](index=586&type=chunk)[587](index=587&type=chunk)[596](index=596&type=chunk) [Financial Summary](index=153&type=section&id=Financial%20Summary) This section provides a summary of the Group's financial performance over the past five fiscal years [Five-Year Financial Performance Overview](index=153&type=section&id=Five-Year%20Financial%20Performance%20Overview) This section presents a summary of the Group's results, assets, and liabilities for the past five fiscal years (2015-2019), showing trends in revenue, profit, total assets, and total liabilities 2015-2019 Key Financial Indicators | Indicator | 2015 (RMB Thousand) | 2016 (RMB Thousand) | 2017 (RMB Thousand) | 2018 (RMB Thousand) | 2019 (RMB Thousand) | | :--------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Revenue (Continuing and Discontinued Operations) | 2,639,432 | 2,707,882 | 3,495,166 | 4,648,196 | 5,938,095 | | Profit Attributable to Owners of the Company | 157,825 | 43,848 | 148,342 | 182,733 | 302,749 | | Total Assets | 9,143,298 | 9,573,382 | 10,682,437 | 14,886,033 | 18,635,880 | | Total Liabilities | (4,778,793) | (5,281,397) | (6,217,362) | (10,082,115) | (13,394,626) | | Equity Attributable to Owners of the Company | 3,200,504 | 3,101,877 | 3,213,509 | 3,362,362 | 3,622,593 | - The 2015 and 2016 financial summaries have been restated to include BCG NZ Investment Holding Limited and its subsidiaries, and to reflect changes in accounting policy for indefinite-lived intangible assets[610](index=610&type=chunk)[611](index=611&type=chunk)

[Company Information](index=3&type=section&id=Company%20Information) This section details the company's fundamental registration, governance, and operational support entities - This section provides a detailed list of the company's core corporate governance and operational support entities, including basic registration information, board members, committee compositions, main office addresses, auditors, legal advisors, principal bankers, and share registrars[6](index=6&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review and Outlook](index=4&type=section&id=Business%20Review%20and%20Outlook) In H1 2019, the company expanded its domestic waste treatment business with **10 new projects** and **RMB 2.87 billion** investment, while maintaining stable overseas operations through BCG NZ - Despite macroeconomic uncertainties, the company benefited from China's policy support for the green economy and environmental protection industry, viewing it as a new growth driver and unprecedented opportunity[7](index=7&type=chunk) H1 2019 Market Expansion Achievements | Metric | Value | | :--- | :--- | | New Projects | 10 | | Total Investment | Approximately RMB 2.87 billion | | New Annual Designed Treatment Capacity | 2.265 million tons of municipal solid waste | | New Daily Treatment Capacity | 6,300 tons | H1 2019 Domestic Project Operating Data | Metric | Value | | :--- | :--- | | Municipal Solid Waste Processed | Approximately 1.92 million tons | | Waste Electrical Appliances Disassembled | Approximately 1.62 million units | | On-grid Power Generation | 145 million kWh | - As of June 30, 2019, the company had a domestic project pipeline of **73 projects** with a total investment of approximately **RMB 18.7 billion** and a total designed annual municipal solid waste treatment capacity of approximately **15.99 million tons**[12](index=12&type=chunk) - In overseas markets, the company holds a **51% stake** in BCG NZ, New Zealand's largest waste management service provider, which holds over **30% market share** and serves over **200,000 customers** in New Zealand[13](index=13&type=chunk) [Financial Review](index=6&type=section&id=Financial%20Review) In H1 2019, profit attributable to owners increased by **99%** to **RMB 171.2 million**, driven by domestic project growth and impairment reversal, despite a **75.3%** rise in finance costs due to green bond issuance H1 2019 Key Financial Indicators | Metric | H1 2019 | H1 2018 | YoY Change | | :--- | :--- | :--- | :--- | | Net Profit Attributable to Owners | RMB 171.2 million | RMB 86 million | +99% | | Waste Treatment Business Revenue | RMB 2.8368 billion | - | +27.0% | | Gross Profit Margin | Approximately 27.5% | - | - | | Administrative Expenses | RMB 321.9 million | - | +8.8% | | Finance Costs | RMB 213.5 million | - | +75.3% | - A significant reason for the substantial profit growth was the reversal of prior year impairment losses and recovery of related interest for the Nanchang project, impacting net profit by approximately **RMB 59.8 million**[14](index=14&type=chunk) Financial Position Summary (As of June 30, 2019) | Metric | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | RMB 16.2644 billion | - | | Gearing Ratio | Approximately 69% | Approximately 68% | | Current Ratio | Approximately 1.46 | Approximately 1.59 | | Cash and Bank Balances | RMB 1.9247 billion | RMB 2.4115 billion | | Outstanding Borrowings | RMB 6.4040 billion | RMB 5.8347 billion | - The Board resolved not to declare an interim dividend for the six months ended June 30, 2019[26](index=26&type=chunk) [Review Report on Interim Condensed Consolidated Financial Statements](index=8&type=section&id=Review%20Report%20on%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents the independent auditor's review report on the interim condensed consolidated financial statements, confirming their preparation in accordance with relevant accounting standards - Independent auditor Ernst & Young conducted a review of the company's interim financial information in accordance with Hong Kong Standard on Review Engagements 2410[30](index=30&type=chunk) - The review concluded that the auditor found no matters leading them to believe the interim financial information was not prepared in all material respects in accordance with Hong Kong Accounting Standard 34, Interim Financial Reporting[31](index=31&type=chunk) [Interim Financial Report](index=9&type=section&id=Interim%20Financial%20Report) [Interim Condensed Consolidated Statement of Profit or Loss](index=9&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2019, revenue increased by **27.0%** to **RMB 2.837 billion**, gross profit rose by **43.4%** to **RMB 779 million**, and profit attributable to owners grew **99.0%** to **RMB 171 million** Statement of Profit or Loss Summary (For the six months ended June 30) | Metric (RMB thousands) | 2019 | 2018 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 2,836,775 | 2,233,769 | +27.0% | | Gross Profit | 778,717 | 543,041 | +43.4% | | Profit Before Tax | 344,771 | 194,632 | +77.1% | | Profit for the Period | 232,825 | 144,247 | +61.4% | | Profit Attributable to Owners of the Parent | 171,194 | 86,036 | +99.0% | | Basic Earnings Per Share | RMB 1.20 cents | RMB 0.60 cents | +100% | [Interim Condensed Consolidated Statement of Comprehensive Income](index=10&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) For the six months ended June 30, 2019, total comprehensive income was **RMB 206 million**, with **RMB 153 million** attributable to owners of the parent, after accounting for profit for the period and other comprehensive income items Statement of Comprehensive Income Summary (For the six months ended June 30) | Metric (RMB thousands) | 2019 | 2018 | | :--- | :--- | | Profit for the Period | 232,825 | 144,247 | | Other Comprehensive Income for the Period (after tax) | (27,229) | (75,183) | | Total Comprehensive Income for the Period | 205,596 | 69,064 | | Total Comprehensive Income Attributable to Owners of the Parent | 152,907 | 42,237 | [Interim Condensed Consolidated Statement of Financial Position](index=11&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2019, total assets increased by **9.2%** to **RMB 16.264 billion**, with total liabilities at **RMB 11.209 billion** and net assets at **RMB 5.055 billion**, driven by growth in non-current assets Statement of Financial Position Summary | Metric (RMB thousands) | June 30, 2019 | December 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 11,981,970 | 10,545,812 | +13.6% | | Total Current Assets | 4,282,460 | 4,340,221 | -1.3% | | **Total Assets** | **16,264,430** | **14,886,033** | **+9.2%** | | Total Current Liabilities | 2,940,387 | 2,723,517 | +8.0% | | Total Non-current Liabilities | 8,268,918 | 7,358,598 | +12.4% | | **Total Liabilities** | **11,209,305** | **10,082,115** | **+11.2%** | | **Net Assets** | **5,055,125** | **4,803,918** | **+5.2%** | | Equity Attributable to Owners of the Parent | 3,515,269 | 3,362,362 | +4.5% | [Interim Condensed Consolidated Statement of Changes in Equity](index=13&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2019, equity attributable to owners of the parent increased from **RMB 3.362 billion** to **RMB 3.515 billion**, primarily driven by profit and total comprehensive income for the period - The increase in equity attributable to owners of the parent during the period was primarily driven by current period profit, alongside the combined impact of exchange rate fluctuations, fair value changes in financial assets, and cash flow hedges[41](index=41&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=15&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) In H1 2019, net cash outflow from operating activities was **RMB 471 million**, net cash outflow from investing activities was **RMB 497 million**, and net cash inflow from financing activities was **RMB 433 million**, resulting in a **RMB 546 million** decrease in cash and cash equivalents Statement of Cash Flows Summary (For the six months ended June 30) | Metric (RMB thousands) | 2019 | 2018 | | :--- | :--- | | Net Cash Flows Used in Operating Activities | (470,779) | (142,629) | | Net Cash Flows Used in Investing Activities | (496,631) | (441,999) | | Net Cash Flows From Financing Activities | 432,517 | 976,303 | | Net Decrease in Cash and Cash Equivalents | (534,893) | 391,675 | | Cash and Cash Equivalents at Beginning of Period | 2,403,522 | 892,790 | | Cash and Cash Equivalents at End of Period | 1,857,178 | 1,290,421 | [Notes to Interim Condensed Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, key estimates, and judgments, covering the adoption of HKFRS 16, segment information, revenue breakdown, borrowings, related party transactions, and fair value of financial instruments [3. Accounting Policies and Disclosures Changes](index=17&type=section&id=3.%20Accounting%20Policies%20and%20Disclosures%20Changes) The most significant accounting policy change was the adoption of HKFRS 16 Leases, leading to the recognition of **RMB 280 million** in right-of-use assets and lease liabilities as of January 1, 2019 - The adoption of HKFRS 16 Leases significantly impacted the statement of financial position by increasing both assets and liabilities, and altered the presentation of subsequent lease-related expenses in the statement of profit or loss from operating lease rentals to depreciation and interest expenses[52](index=52&type=chunk)[56](index=56&type=chunk) [4. Operating Segment Information](index=22&type=section&id=4.%20Operating%20Segment%20Information) The Group's operations are segmented by geography into China and New Zealand, with China's waste treatment and waste-to-energy segment showing significant revenue growth in H1 2019 Segment Revenue and Results (For the six months ended June 30) | Segment (RMB thousands) | 2019 Revenue | 2018 Revenue | 2019 Results | 2018 Results | | :--- | :--- | :--- | :--- | :--- | | China | 1,646,779 | 1,114,964 | 148,538 | 55,936 | | New Zealand | 1,189,996 | 1,118,805 | 84,287 | 88,311 | | **Total** | **2,836,775** | **2,233,769** | **232,825** | **144,247** | [5. Revenue, Other Income and Gains](index=24&type=section&id=5.%20Revenue%2C%20Other%20Income%20and%20Gains) Total Group revenue is primarily derived from construction services under service concession arrangements, waste collection, landfill services, and electrical appliance dismantling, with construction services being the largest and fastest-growing component Revenue from Contracts with Customers (For the six months ended June 30) | Revenue Source (RMB thousands) | 2019 | 2018 | | :--- | :--- | | Construction services under service concession arrangements | 1,056,702 | 835,022 | | Waste collection services | 750,084 | 726,487 | | Landfill services | 257,985 | 216,295 | | Electrical appliance dismantling | 215,231 | 97,888 | | Operation services under service concession arrangements | 190,661 | 96,954 | | Others | 274,320 | 198,036 | [21. Interest-bearing Bank and Other Borrowings](index=33&type=section&id=21.%20Interest-bearing%20Bank%20and%20Other%20Borrowings) As of June 30, 2019, total interest-bearing borrowings amounted to **RMB 6.404 billion**, comprising **RMB 2.759 billion** in secured and **RMB 3.645 billion** in unsecured borrowings, with approximately **79%** classified as non-current liabilities Borrowing Structure (As of June 30, 2019) | Category (RMB thousands) | Amount | | :--- | :--- | | Secured bank and other borrowings | 2,758,850 | | Unsecured bank and other borrowings | 3,645,123 | | **Total** | **6,403,973** | | Of which: Due within one year | 1,326,134 | | Of which: Non-current portion | 5,077,839 | [26. Related Party Transactions](index=37&type=section&id=26.%20Related%20Party%20Transactions) The Group engages in various related party transactions, primarily with its controlling shareholder Beijing Capital Group and its subsidiaries, including significant interest payments and guarantee fees - The Group's financing activities are highly dependent on the support of its controlling shareholder, Beijing Capital Group, and its subsidiaries, including direct loans, guarantees, and keepwell undertakings for bond issuance[130](index=130&type=chunk)[131](index=131&type=chunk)[137](index=137&type=chunk) [Disclosure of Interests and Other Information](index=44&type=section&id=Disclosure%20of%20Interests%20and%20Other%20Information) [Major Shareholders' Interests](index=44&type=section&id=Major%20Shareholders%27%20Interests) This section discloses major shareholders' equity, with Beijing Capital Group Company Limited holding a combined **66.92%** stake through its subsidiaries as of June 30, 2019 Major Shareholders' Shareholding (As of June 30, 2019) | Shareholder Name | Capacity | Number of Shares (Long Position) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Capital (Hong Kong) Limited | Beneficial owner | 6,449,026,736 | 45.11% | | Capital Huaxing International Investment Limited | Beneficial owner | 3,116,767,072 | 21.80% | | Beijing Capital Group Company Limited | Interest in controlled corporation | 9,565,793,808 | 66.92% | [Corporate Governance](index=45&type=section&id=Corporate%20Governance) The company maintains high corporate governance standards, fully complying with the HKEX Corporate Governance Code, with the Audit Committee reviewing interim results and external auditors conducting an independent review - The company complied with all code provisions of the HKEX Corporate Governance Code during the review period[164](index=164&type=chunk) - The Audit Committee, comprising three independent non-executive directors, reviewed the Group's accounting principles, internal controls, and the unaudited interim results[166](index=166&type=chunk)

[Table of Contents](index=2&type=section&id=Table%20of%20Contents) [Company Information](index=3&type=section&id=Company%20Information) [Company Information Overview](index=3&type=section&id=Company%20Information%20Overview) This chapter provides fundamental information about Capital Environment Holdings Limited, including board members, committee composition, principal offices, auditors, legal advisors, principal bankers, and share registrars, offering an overview of the company's governance structure and operational support system - The Board of Directors comprises four executive directors and three independent non-executive directors, with Ms. Zhang Meng serving as Chairperson and Mr. Cao Guoxian as Chief Executive Officer[8](index=8&type=chunk) - The company has established an Audit Committee, Nomination Committee, and Remuneration Committee to enhance corporate governance[8](index=8&type=chunk) - The company is incorporated in the Cayman Islands, with its principal place of business in Central, Hong Kong, and stock code **03989**[2](index=2&type=chunk)[8](index=8&type=chunk) [Chairman's Statement](index=5&type=section&id=Chairman's%20Statement) [2018 Review and Outlook](index=5&type=section&id=2018%20Review%20and%20Outlook) The Chairman reviewed 2018, noting global economic challenges from US-China trade friction, yet China's environmental protection industry achieved rapid development under the 'Beautiful China' initiative. The company actively seized opportunities, rapidly expanded its environmental sector, broadened its business scope and geographical footprint, achieving significant financial growth and market leadership - In 2018, the company successfully secured 11 waste treatment projects, with a total investment of approximately **RMB 2.12 billion**, adding a designed annual capacity of **2.24 million tons** of domestic waste treatment[13](index=13&type=chunk) - As of the end of 2018, the company's projects covered 16 provinces and municipalities in China, expanded into the overseas New Zealand market, and implemented 63 domestic environmental projects with a total investment exceeding **RMB 15.8 billion**[13](index=13&type=chunk) Key Financial Indicators for 2018 | Indicator | 2018 (RMB) | 2017 (RMB) | YoY Growth | | :-------- | :--------- | :--------- | :--------- | | Main Business Revenue | 4.65 billion | - | 33% | | Total Assets | 14.89 billion | - | 39% | | Net Assets | 4.8 billion | - | 8% | - The company will be guided by the 'Eco+' development strategy, leveraging the high-quality assets of its solid waste business to fully build a light-asset business model, aiming to become the most trusted ecological environment enterprise[15](index=15&type=chunk)[16](index=16&type=chunk) [Management Discussion and Analysis](index=8&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review and Outlook](index=9&type=section&id=Business%20Review%20and%20Outlook) The Chief Executive Officer elaborated on the company's significant operating achievements and industry recognition in 2018, navigating complex international economic conditions by seizing opportunities from China's environmental policies through market expansion, engineering construction, operational management, technological innovation, and market financing, while outlining future business expansion in depth, length, and breadth - The company was honored for the seventh time as one of the 'Top Ten Influential Enterprises in China's Solid Waste Industry' and received multiple environmental and investor relations awards[24](index=24&type=chunk) 2018 Operating Performance | Indicator | 2018 (RMB) | YoY Growth | | :-------- | :--------- | :--------- | | Total Assets | 14.886 billion | 39.35% | | Operating Revenue | 4.648 billion | 33% | | Profit for the Year | 311 million | 13.49% | | Net Profit Attributable to Parent Company | 183 million | 23.18% | - Regarding project reserves, the company has 63 environmental projects in China, with a total investment of approximately **RMB 15.8 billion**, and a total designed capacity of approximately **13.65 million tons** of annual waste treatment and **3.2 million units** of annual electrical and electronic equipment dismantling[25](index=25&type=chunk) - In market expansion, 11 waste treatment projects were successfully secured, adding a designed annual capacity of **2.24 million tons** of domestic waste treatment, forming a full-chain environmental protection business model[27](index=27&type=chunk) - In operational management, 32 projects were in operation or trial operation, achieving an annual domestic waste treatment volume of **3.1275 million tons**, dismantling **2.1408 million units**, and providing **238,479,156 kWh** of grid-connected electricity[28](index=28&type=chunk) - In market financing, the company successfully issued **USD 300 million** in 3-year senior unsecured green bonds and obtained **RMB 1.4 billion** in bank credit facilities[31](index=31&type=chunk) - In overseas markets, the company holds a **51% stake** in BCG NZ Group, New Zealand's largest waste management service provider, with a market share exceeding **30%**[31](index=31&type=chunk) - Future plans include consolidating domestic market share, accelerating technological innovation, becoming a comprehensive solid waste industry chain service provider, and leveraging national policies to expand projects in specific economic zones, thereby achieving business expansion in depth, length, and breadth[33](index=33&type=chunk) [Financial Review](index=13&type=section&id=Financial%20Review) This section provides a detailed review of the 2018 financial performance, including the change in functional currency, significant growth in revenue and profit, increased finance costs, and changes in the asset and liability structure, particularly the improvement in the current ratio - Effective July 1, 2018, the company's functional currency changed from RMB to USD, reflecting the internationalization trend of future business transactions[36](index=36&type=chunk) 2018 Financial Performance | Indicator | 2018 (RMB) | 2017 (RMB) | YoY Growth | | :-------- | :--------- | :--------- | :--------- | | Revenue from Waste Treatment and Waste-to-Energy Business | 4.648 billion | 3.495 billion | 33% | | Profit Attributable to Owners | 183 million | 148 million | 23% | | Finance Costs | 310 million | 196 million | 58% | 2018 Financial Position | Indicator | Dec 31, 2018 (RMB) | Dec 31, 2017 (RMB) | Change | | :-------- | :----------------- | :----------------- | :----- | | Total Assets | 14.886 billion | - | 39.35% | | Net Assets Attributable to Owners | 3.362 billion | - | - | | Gearing Ratio | 68% | 58% | Up 10 percentage points | | Current Ratio | 1.59 | 0.56 | Increased | - The increase in current ratio was primarily due to cash inflows from bond issuance and the reclassification of shareholder loans to non-current liabilities[38](index=38&type=chunk) - As of December 31, 2018, cash and bank balances were approximately **RMB 2.412 billion**, an increase of approximately **RMB 1.502 billion** from the end of 2017, mainly attributable to debt financing and new bank loans[39](index=39&type=chunk) - Outstanding borrowings were approximately **RMB 5.835 billion**, an increase of approximately **RMB 1.136 billion** from the end of 2017, with fixed-rate borrowings accounting for **67.3%** and floating-rate borrowings for **32.7%**[41](index=41&type=chunk) [Board of Directors and Senior Management](index=14&type=section&id=Board%20of%20Directors%20and%20Senior%20Management) [Board Members](index=15&type=section&id=Board%20Members) This section introduces the backgrounds, professional experiences, and appointments of the company's executive and independent non-executive directors, showcasing the diversity and professionalism of the Board members - Ms. Zhang Meng (Chairperson) has a professional background in environmental resource assessment and holds key positions at Beijing Capital Group[48](index=48&type=chunk) - Mr. Cao Guoxian (Chief Executive Officer) possesses extensive experience in overseas investment and financing and an international perspective[48](index=48&type=chunk)[49](index=49&type=chunk) - Ms. Hao Chunmei is a senior accountant, certified public accountant, and certified appraiser, with extensive experience in finance, corporate management, mergers and acquisitions, and corporate finance[49](index=49&type=chunk) - Independent Non-executive Directors Mr. Pu Bingrong, Mr. Zheng Qitai, and Dr. Chan Yee Wah possess profound professional knowledge in urban planning, accounting, financial management, and corporate governance[51](index=51&type=chunk)[52](index=52&type=chunk) [Senior Management](index=17&type=section&id=Senior%20Management) This section outlines the responsibilities, educational backgrounds, and professional experiences of the company's senior management members, covering key areas such as corporate management, capital markets, technology and engineering, operations management, legal affairs, and investment - Mr. Gu Jinshan (Deputy General Manager) is responsible for corporate management, holding a Ph.D. in Engineering and experience in telecommunications and government administration[54](index=54&type=chunk) - Mr. Liu Yanjun (Deputy General Manager) is responsible for capital markets and company board management, with over ten years of experience in environmental protection and capital markets[54](index=54&type=chunk)[55](index=55&type=chunk) - Mr. Xu Jinjun (Deputy General Manager) is responsible for technology, engineering, and hazardous industry operations management, with nearly twenty years of experience in the environmental protection sector[55](index=55&type=chunk) - Mr. Yan Shengli (Vice President) is responsible for the operations center and legal affairs, serving as a practicing lawyer and arbitrator[57](index=57&type=chunk) - Mr. Hu Zaichun (Vice President) is responsible for Investment Department I and anaerobic treatment industry operations management, with a background in ecological environment research and investment management experience[57](index=57&type=chunk)[58](index=58&type=chunk) - Mr. Yin Hang (Assistant President) is responsible for the Beijing-Tianjin-Hebei Investment Center and South China regional business management, familiar with franchise operating models and corporate internal controls[59](index=59&type=chunk) - Ms. Wang Bingni (Company Secretary) has over twenty years of experience in company secretarial matters, internal control, and financial management for Hong Kong listed companies[59](index=59&type=chunk) [Corporate Governance Report](index=19&type=section&id=Corporate%20Governance%20Report) [Board of Directors](index=19&type=section&id=Board%20of%20Directors) The company's Board of Directors is committed to maintaining high corporate governance standards, responsible for setting strategic direction, objectives, and business development plans, and overseeing senior management performance. The Board's diverse composition, including four executive and three independent non-executive directors, ensures appropriate power balance and independent judgment - The Board is responsible for formulating the Group's strategic direction, objectives, and business development plans, and monitoring the performance of senior management[63](index=63&type=chunk) - The Board comprises four executive directors (Ms. Zhang Meng, Mr. Cao Guoxian, Mr. Cheng Jialin, Ms. Hao Chunmei) and three independent non-executive directors (Mr. Pu Bingrong, Mr. Zheng Qitai, Dr. Chan Yee Wah)[64](index=64&type=chunk) - All directors participate in continuous professional development to update their knowledge and skills, ensuring their full contribution to the Board[70](index=70&type=chunk) 2018 Board Meetings and General Meetings Attendance | Director Name | Board Meetings Attended/Held | General Meetings Attended/Held | | :------------ | :--------------------------- | :----------------------------- | | Ms. Zhang Meng | 9/9 | 1/1 | | Mr. Cao Guoxian | 9/9 | 1/1 | | Mr. Cheng Jialin | 9/9 | 1/1 | | Ms. Hao Chunmei | 5/6 | 1/1 | | Mr. Pu Bingrong | 9/9 | 1/1 | | Mr. Zheng Qitai | 9/9 | 1/1 | | Dr. Chan Yee Wah | 9/9 | 1/1 | [Board Committees](index=22&type=section&id=Board%20Committees) The company has established a Nomination Committee, Remuneration Committee, and Audit Committee to assist the Board in fulfilling its duties, ensuring compliance with corporate governance codes in director appointments, remuneration determination, financial reporting, risk management, and internal controls - The Nomination Committee is responsible for reviewing the Board structure, identifying suitable director candidates, and making recommendations on director appointments, re-election, and succession planning[76](index=76&type=chunk) - The Remuneration Committee is responsible for making recommendations on the remuneration policy and structure for directors and senior management, and approving the terms of executive directors' service contracts[79](index=79&type=chunk) - The Audit Committee is responsible for considering the appointment of external auditors, reviewing financial information, overseeing risk management and internal control systems, and maintaining appropriate relations with external auditors[83](index=83&type=chunk) 2018 Auditor's Remuneration | Service Type | Amount (RMB Thousand) | | :------------- | :-------------------- | | Audit Services | 4,280 | | Non-Audit Services | | | - Tax Services | 476 | | - Interim Financial Statement Review | 825 | | - Others | 1,345 | | **Total** | **6,926** | [Risk Management and Internal Control](index=26&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for establishing and maintaining effective risk management and internal control systems, aiming to identify and manage significant risks, safeguard assets, ensure financial information reliability, and comply with laws and regulations. The company has established a clear risk governance framework and conducts regular internal audits and external independent reviews - The Board is responsible for determining the nature and extent of acceptable risks and ensuring the establishment and maintenance of effective risk management and internal control systems[89](index=89&type=chunk) - Management is responsible for detailed risk identification, assessment, and management, and for formulating key management guidelines for daily operational processes[90](index=90&type=chunk) - The Internal Audit Department and Corporate Management Department are responsible for leading internal control construction, risk assessment, compiling a risk register, and conducting independent internal control supervision and evaluation[92](index=92&type=chunk) - The Board has reviewed the risk management and internal control systems for the year ended December 31, 2018, and considers them effective and adequate[99](index=99&type=chunk) [Shareholder Rights and Investor Relations](index=28&type=section&id=Shareholder%20Rights%20and%20Investor%20Relations) The company is committed to upholding shareholder rights, providing clear procedures for convening general meetings, proposing resolutions, and nominating directors. Concurrently, the company actively communicates with shareholders, media, analysts, and fund managers through various channels to enhance investor relations and ensure information transparency - Shareholders may request to convene an extraordinary general meeting in accordance with the articles of association and have the right to propose resolutions at general meetings[103](index=103&type=chunk)[104](index=104&type=chunk) - The company maintains close communication with media, analysts, and fund managers through one-on-one meetings, roadshows, and conferences, and designates senior management to conduct regular dialogues[108](index=108&type=chunk) - The directors confirm their responsibility for preparing financial statements that give a true and fair view of the Group's financial position and for maintaining proper accounting records[110](index=110&type=chunk) [Directors' Report](index=30&type=section&id=Directors'%20Report) [Principal Activities and Performance](index=31&type=section&id=Principal%20Activities%20and%20Performance) The company primarily engages in waste treatment technologies and services, particularly waste-to-energy projects. The 2018 performance is disclosed in the consolidated statement of profit or loss and other comprehensive income, and the Board does not recommend a final dividend, having adopted a new dividend policy - The company primarily engages in providing waste treatment technologies and services, focusing on technology development, design, system integration, project investment, consulting, operation, and maintenance of waste treatment facilities, especially waste-to-energy projects[114](index=114&type=chunk) - The Board does not recommend the declaration of a final dividend for the year ended December 31, 2018[116](index=116&type=chunk) - The company adopted a dividend policy on March 21, 2019, and will consider financial performance, working capital, capital expenditures, debt-to-equity ratio, economic conditions, and other factors when determining future dividend distributions[116](index=116&type=chunk) [Financial Position and Financing Activities](index=31&type=section&id=Financial%20Position%20and%20Financing%20Activities) This section outlines the company's financial position changes in 2018, including movements in property, plant, and equipment, share capital, and significant financing activities such as green bond issuance and bank borrowings - On September 11 and October 18, 2018, the company successfully issued **USD 300 million** in aggregate principal amount of 5.625% senior unsecured green bonds due 2021, for financing or refinancing eligible green assets and projects[123](index=123&type=chunk) - The green bonds received a 'BBB' rating from Fitch Ratings and benefited from a keepwell and liquidity support deed provided by the controlling shareholder, Beijing Capital Group[123](index=123&type=chunk) [Directors and Major Shareholders Information](index=32&type=section&id=Directors%20and%20Major%20Shareholders%20Information) This section provides information on changes in Board members, confirmation of independent non-executive directors' independence, and major shareholders' interests in the company's shares, emphasizing the company's commitment to independence and transparency - Mr. Cheng Jialin, Ms. Hao Chunmei, Mr. Pu Bingrong, and Dr. Chan Yee Wah will retire at the forthcoming Annual General Meeting and are eligible for re-election[126](index=126&type=chunk) - The company has received annual confirmations of independence from each independent non-executive director and considers them all to be independent, even though Mr. Pu Bingrong and Mr. Zheng Qitai have served for over 9 years[127](index=127&type=chunk) Major Shareholder Holdings as of December 31, 2018 | Shareholder Name | Capacity | Number of Shares/Relevant Shares | Approximate Percentage of Shareholding | | :--------------- | :------- | :------------------------------- | :------------------------------------- | | Capital (Hong Kong) Limited | Beneficial Owner | 6,449,026,736 (L) | 45.11% | | Beijing Capital Co., Ltd. | Controlled Corporate Interest | 6,449,026,736 (L) | 45.11% | | Capital Huaxing International Investment Co., Ltd. | Beneficial Owner | 3,116,767,072 (L) | 21.80% | | Beijing Capital Group Co., Ltd. | Controlled Corporate Interest | 9,565,793,808 (L) | 66.92% | [Connected Transactions and Customers & Suppliers](index=35&type=section&id=Connected%20Transactions%20and%20Customers%20%26%20Suppliers) This section discloses the company's continuing connected transactions in 2018, particularly corporate finance guarantee services related to the controlling shareholder, Beijing Capital Group, and provides information on sales and procurement concentration with major customers and suppliers - Capital Investment, a wholly-owned subsidiary of the company, entered into an entrusted guarantee contract with Beijing Capital Group, where Beijing Capital Group provides corporate finance guarantee services, with an annual guarantee fee cap of **RMB 6 million**[140](index=140&type=chunk) - As of December 31, 2018, the company drew down a loan of **RMB 100 million** from Ping An Asset under a financing contract, with a guarantee fee payable to Beijing Capital Group of **RMB 6 million**[140](index=140&type=chunk) - Sales to the Group's five largest customers accounted for **22.7%** of total sales for the year, with the largest customer accounting for **7.6%**. Purchases from the five largest suppliers accounted for **14.4%** of total purchases, with the largest supplier accounting for **5.8%**[145](index=145&type=chunk) [Independent Auditor's Report](index=37&type=section&id=Independent%20Auditor's%20Report) [Auditor's Opinion](index=37&type=section&id=Auditor's%20Opinion) Ernst & Young issued an unqualified opinion on the consolidated financial statements of Capital Environment Holdings Limited and its subsidiaries, stating that the statements present a true and fair view of the company's financial position as of December 31, 2018, and its financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards - The auditor believes that the consolidated financial statements present a true and fair view of the Group's consolidated financial position as of December 31, 2018, and its consolidated financial performance and consolidated cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards[155](index=155&type=chunk) - The auditor's work was conducted in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants and is independent of the Group[156](index=156&type=chunk) [Key Audit Matters](index=37&type=section&id=Key%20Audit%20Matters) The auditor identified three key audit matters: accounting for service concession arrangements, impairment of franchise financial assets, and impairment of goodwill and intangible assets with indefinite useful lives, all involving significant management judgment and estimates with substantial impact on the financial statements - Accounting for service concession arrangements was identified as a key audit matter due to significant management judgments and estimates involved in determining the accounting model, estimating future guaranteed receivables, construction gross profit margins, discount rates, and percentage of completion for construction services[159](index=159&type=chunk) - Impairment of franchise financial assets is a key audit matter; as of December 31, 2018, its balance was **RMB 1.835 billion**, representing **38%** of the Group's net assets, involving management's judgment on expected credit loss provisions and adjustments for forward-looking factors[161](index=161&type=chunk) - Impairment of goodwill and intangible assets with indefinite useful lives is a key audit matter, as their impairment tests involve highly judgmental assumptions such as future revenue growth rates, operating profit margins, perpetual growth rates, and discount rates, and the related asset balances are significant (**goodwill RMB 2.05 billion**, **intangible assets RMB 853 million**)[163](index=163&type=chunk) [Annual Financial Report](index=41&type=section&id=Annual%20Financial%20Report) [Consolidated Statement of Profit or Loss](index=42&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) The consolidated statement of profit or loss shows that for the year ended December 31, 2018, the company's revenue grew significantly, with both profit for the year and profit attributable to owners of the parent company increasing, but finance costs also rose substantially Key Data from 2018 Consolidated Statement of Profit or Loss | Indicator | 2018 (R