香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容 概不負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對 因本公告全部或任何部分內容而產生或因倚賴該等內容而引致的任何損 失承擔任何責任。 KANGDA INTERNATIONAL ENVIRONMENTAL COMPANY LIMITED 康 達 國 際 環 保 有 限 公 司 （於開曼群島註冊成立的有限公司） （股份代號：6136） 截 至 二 零 二 二 年 十 二 月 三 十 一 日 止 年 度 年 度 業 績 公 告 摘要 • 收 益 約 為 人 民 幣2,896.6百 萬 元，較 上 年 度 減 少 約0.8%，乃 由 於 建 設 服務收益減少所致。 • 毛 利 為 人 民 幣1,268.6百 萬 元，較 上 年 度 減 少 約5.0%。毛 利 率 約 為 44%，較上年度減少2個百分點，乃由於經營成本普遍增加所致。 • 母 公 司 擁 有 人 應 佔 溢 利 約 為 人 民 幣235.7百 萬 元，較 上 年 度 減 少 約 42.9%。 • 年 內 母 公 司 普 通 權 益 持 有 人 應 佔 每 股 基 本 及 攤 薄 ...

Financial Performance - In the first half of 2022, Kangda International faced challenges due to increased operating costs and a decline in profit margins, with gross profit margin and net profit margin slightly decreasing compared to the previous period [11]. - The Group recorded revenue of RMB 1,661.4 million, an increase of approximately 12.6% compared to RMB 1,475.5 million in the previous period [45]. - Profit for the period was RMB 202,406,000, a decrease of 15.7% compared to RMB 240,004,000 in the prior year [120]. - Earnings per share attributable to ordinary equity holders of the parent was 9.44 cents, down from 11.07 cents in the previous year [120]. - The Group's cost of sales for the same period was RMB 942.9 million, representing an increase of approximately 17.8% from RMB 800.1 million in the previous period [46]. - The gross profit margin for the six months ended June 30, 2022, was approximately 43.2%, a decrease of 2.6 percentage points from approximately 45.8% in the previous period [51]. - Administrative expenses increased by approximately 23% to RMB 137.4 million compared to RMB 111.8 million in the previous period [54]. - Finance costs for the six months ended June 30, 2022, were RMB 280.3 million, a slight decrease from RMB 283.9 million in the previous period [54]. - The effective tax rate for the six months ended June 30, 2022, was approximately 27%, an increase of 4 percentage points from approximately 23% in the previous period [60]. Cash Flow and Liquidity - The Group maintained a positive operating cash flow, which significantly improved during the period, demonstrating effective cash management strategies [11]. - Net cash flows from operating activities for the six months ended June 30, 2022, were RMB 140.1 million, compared to RMB 31.3 million for the same period in 2021 [75]. - Cash and cash equivalents increased to RMB 561.4 million as of June 30, 2022, compared to RMB 289.9 million at the end of the previous period, marking an increase of RMB 271.5 million due to net cash inflows from operating, investing, and financing activities [73]. - The Group's total interest-bearing debts increased to RMB 9,832.4 million as of June 30, 2022, compared to RMB 9,469.7 million as of December 31, 2021 [80]. - The gearing ratio slightly decreased to 70.5% as of June 30, 2022, from 70.7% in the corresponding period last year [83]. Operational Capacity and Projects - The Group's operational treatment capacity exceeded 4 million tons per day as of June 30, 2022, with a total of 112 service concession arrangements projects, including 106 wastewater treatment plants [21][28]. - The Group aims to enhance profitability and operational cash flows by raising treatment standards and expanding existing projects in the wastewater treatment sector [17][24]. - The Group's daily wastewater treatment capacity in operation is approximately 3,989,500 tons, with an additional 275,500 tons not yet transferred [29]. - The Group has engaged in comprehensive water environment remediation projects, including river harnessing and sponge city construction, through previously signed PPP and EPC contracts [22][25]. - The Group's rural water improvement initiatives focus on constructing wastewater treatment facilities and pipelines to enhance rural living environments, initiated since 2016 [23][26]. Financing and Investment Strategies - Kangda International secured a green loan of US$16 million, marking its first green financing in Hong Kong, reflecting its commitment to environmentally sustainable practices [11]. - The Group is exploring diversified financing channels, including equity and debt financing and real estate investment trusts (REITs) in Mainland China [11]. - The Group's financing strategy includes lowering financing costs and improving debt structure by developing more financing channels and enhancing operational efficiency [17][24]. - The Group is committed to participating in the development of Infrastructure REITs as encouraged by the central government, considering market conditions and financial position [17][18]. Regulatory Environment and Industry Outlook - The central government is focused on the healthy development of the wastewater treatment industry, with ongoing policy optimization during the 14th Five-Year Plan period to enhance water ecological environment management [12]. - The National Development and Reform Commission has proposed measures to strengthen water environment protection and promote the resourceful use of wastewater and sludge [12]. - Local government departments have launched plans to set targets for ecological and environmental management, indicating a supportive regulatory environment for the industry [12]. - The overall industry is expected to develop in a more standardized, professional, and healthy direction due to favorable government policies [12]. Corporate Governance and Compliance - The Company has complied with the Corporate Governance Code with no deviations reported for the six months ended 30 June 2022 [85]. - The Group enhanced overall control over budget and risk management, optimizing management strategies and improving operational efficiency [85]. - The Company has established an Audit Committee to oversee the financial reporting process and risk management systems [106]. - The Company has adopted a board diversity policy to enhance the effectiveness of the Board by ensuring a balance of skills, experience, and diversity [109].

Financial Performance - Total revenue for the year decreased by approximately 12% to RMB 2,919.0 million due to a decline in revenue from construction services[14] - Gross profit for the year increased slightly by approximately 1% to RMB 1,335.3 million, with an overall gross profit margin improving to 46% from 40% last year[14] - Profit attributable to equity shareholders decreased to RMB 412.8 million, a decrease of approximately 12% compared to 2020[18] - Basic earnings per share for the year was RMB 19.29 cents[18] - The Group's cost of sales for the year was RMB 1,583.7 million, representing a decrease of approximately 21% from RMB 2,006.8 million in the previous period[59] - Other income and gains amounted to RMB 106.6 million, slightly down from RMB 107.2 million in the previous period, primarily including government grants of RMB 60.5 million[63] - Selling and distribution expenses decreased significantly by approximately 56% to RMB 1.1 million from RMB 2.5 million in the previous period[64] - Administrative expenses increased by approximately 13% to RMB 246.0 million from RMB 217.6 million in the previous period, mainly due to increased staff costs[65] - The Group's financing costs slightly increased to RMB 565.7 million, compared to RMB 561.8 million in the previous year, mainly due to an increase in average interest-bearing bank borrowings[74] Operational Efficiency - The actual wastewater treatment volume increased to 1,262.4 million tonnes, representing an increase of approximately 11% compared to 2020[14] - The Group continues to enhance its operational efficiency despite challenges posed by the pandemic[14] - The annualized utilization rate for wastewater and reclaimed water treatment plants in operation was approximately 86% for the year ended December 31, 2021, compared to 83% in 2020[46] - The Group's wastewater treatment facility projects have been completed and commenced commercial operation, significantly enhancing wastewater treatment capacity[14] - The Group had 101 service concession arrangement projects under operation with an operational treatment capacity exceeding 4 million tons per day as of December 31, 2021[26] - The Group operated 96 wastewater treatment projects, 2 reclaimed water treatment projects, and 3 sludge treatment projects, with a total daily treatment capacity of 3,961,500 tonnes, representing an increase from 3,766,500 tonnes in 2020[46] Strategic Focus - The Group aims to contribute to the long-term development of the wastewater treatment industry as part of building a beautiful China[13] - The Group plans to focus on municipal wastewater treatment and enhance energy-saving measures to increase revenue and profit[19] - The Group aims to explore wastewater resource recycling and reclaimed water utilization to support national goals while creating greater value for shareholders[19] - The Group's strategic direction aligns with national initiatives for energy conservation and emission reduction[13] Financial Position - As of December 31, 2021, the Group's net asset value per share was RMB 2.53, an increase of approximately 4% compared to the same period last year[18] - Total interest-bearing debts increased to RMB 9,469.7 million as of December 31, 2021, compared to RMB 9,272.8 million in 2020, with 66.2% classified as long-term[99] - The Group's trade and bills receivables rose to RMB 1,776.6 million, an increase of RMB 249.6 million, primarily due to an increase in Urban Water Treatment projects receivables of approximately RMB 401.1 million[84] - Cash and cash equivalents decreased to RMB 289.9 million, down RMB 140.4 million from RMB 430.3 million at the end of the previous year, attributed to increased cash outflows in investing activities[89] Governance and Management - The Company is committed to maintaining high standards of corporate governance, as evidenced by the composition of its audit and nomination committees[130] - The Board of Directors is responsible for leadership and control of the Company, overseeing business, strategic decisions, and performance[149] - The Company has established a code of conduct and compliance manual applicable to employees and directors[164] - The Board has formalized corporate governance duties, including the development and review of governance policies and practices[163] - The Company has complied with all applicable provisions of the Corporate Governance Code during the year ended 31 December 2021[144] Human Resources - The group employed 2,426 staff members as of December 31, 2021, with compensation packages reviewed annually based on performance[110] - The Remuneration Committee reviewed Directors' fees considering increasing duties and market conditions[200] - The review of management's remuneration proposals was aligned with the Board's corporate goals and objectives[200] Future Outlook - The Group is confident about its future profitability and will enhance the profitability and effectiveness of its operations[29] - The Group plans to optimize loan structure and expand financing channels to lower the average interest rate in the coming year[71] - The Group will continue to optimize its debt structure and develop financing channels to reduce financing costs[20]

Operational Capacity and Projects - As of June 30, 2021, the company had established 113 service concession projects, including 106 wastewater treatment plants, 2 water supply plants, 3 sludge treatment plants, and 2 recycled water treatment plants[18]. - The company's operational capacity exceeded 4 million tons per day as of June 30, 2021, reflecting significant growth in wastewater treatment capabilities[15]. - The total operational capacity of the company as of June 30, 2021, is 4,547,050 tons, with 3,981,500 tons for wastewater treatment, 65,000 tons for recycled water treatment, and 550 tons for sludge treatment[20]. - The company has 95 operational wastewater treatment projects, 2 recycled water treatment projects, and 3 sludge treatment projects as of June 30, 2021[26]. - The company is actively involved in rural wastewater management projects, enhancing the living environment in rural areas through the construction of wastewater treatment facilities[16]. Financial Performance - The total operational revenue for urban water services is RMB 558.9 million, an increase of approximately 15% from RMB 487.5 million in the same period last year[27]. - The company recorded total revenue of RMB 1,475.5 million for the six-month period, a decrease of approximately 15% from RMB 1,729.8 million in the previous year, mainly due to a reduction in construction revenue[35]. - Revenue for the first half of 2021 was RMB 1,475,467 thousand, a decrease of 14.7% compared to RMB 1,729,806 thousand in the same period of 2020[116]. - Gross profit increased to RMB 675,374 thousand, up 5.6% from RMB 639,342 thousand year-on-year[116]. - Net profit for the period was RMB 240,004 thousand, representing a growth of 3.5% from RMB 232,366 thousand in the previous year[116]. Cost Management and Profitability - The company aims to enhance profitability and operational cash flow through the upgrading and expansion of existing projects in the wastewater treatment sector[11]. - The company is committed to improving operational efficiency and controlling operational costs to maximize shareholder returns[11]. - The company's gross margin for the six months ended June 30, 2021, was approximately 46%, an increase of 9 percentage points from about 37% in the same period last year[37]. - Sales cost for the six-month period is RMB 800.1 million, a decrease of approximately 27% from RMB 1,090.5 million in the same period last year, mainly due to reduced construction costs[36]. Financing and Debt Management - The company is focusing on diversifying its financing channels to improve its debt structure and financial condition[11]. - Total interest-bearing debt rose to RMB 9,453.3 million as of June 30, 2021, up from RMB 9,272.8 million at the end of 2020, with 73.5% classified as long-term debt[61]. - The company's asset-liability ratio slightly decreased to 70.7% as of June 30, 2021, from 71.0% at the end of 2020[61]. Shareholder Information - Zhao Sizhen holds a significant stake of 546,728,004 shares, representing 25.56% of the company's issued share capital[76]. - Major shareholder China Water Affairs Group Limited owns 953,119,996 shares, accounting for 44.54% of the company's issued share capital[80]. - Baring Private Equity Asia V Holding Limited has a stake of 344,129,996 shares, which is 16.08% of the company's issued share capital[80]. Governance and Compliance - The company established an Audit Committee to assist the Board in providing independent opinions on financial reporting procedures, internal controls, and risk management systems[90]. - The interim financial results were prepared in accordance with International Accounting Standard 34 and were reviewed by Ernst & Young[110]. - The company confirmed that all directors complied with the standards set out in the Securities Trading Code during the six months ended June 30, 2021[96]. Future Outlook and Strategic Plans - The company plans to leverage national environmental policies related to carbon peak and carbon neutrality to explore opportunities in the water industry chain[11]. - The company plans to continue expanding its market presence and investing in new technologies and products[118]. - The company is focused on improving its financial performance through strategic investments and operational improvements in its core segments[182].

Financial Performance - The total revenue for 2020 increased by approximately 18% to RMB 3,332.4 million, marking the highest revenue in the company's history[9]. - The net profit attributable to equity shareholders for 2020 was RMB 470.5 million, an increase of approximately 25% from 2019, achieving a record profit level[9]. - Basic earnings per share for 2020 were RMB 22.39, with the net asset value per share increasing by about 8% to RMB 2.44[9]. - The total operational revenue for urban water services was RMB 1,053.4 million, representing an increase of approximately 18% compared to RMB 894.0 million in the previous year[33]. - The total construction revenue for service concession projects was RMB 1,192.9 million, a year-on-year increase of about 15% from RMB 1,040.4 million[34]. - The group's gross profit margin for the year ended December 31, 2020, was approximately 40%, slightly down from about 41% in the previous year[43]. - The group reported other income and gains of RMB 107.2 million, a decrease of approximately 41% from RMB 182.0 million in the previous year[44]. - The group’s administrative expenses decreased to RMB 217.6 million, down about 11% from RMB 243.8 million in the previous year[46]. - The company’s distributable reserves as of December 31, 2020, amounted to RMB 1,715.0 million, a slight decrease from RMB 1,721.6 million in 2019[193]. - The company did not recommend the distribution of a final dividend for the year ended December 31, 2020, consistent with the previous year[178]. Operational Efficiency - The actual sewage treatment volume rose by about 10% to 1,133.6 million tons compared to 2019[9]. - The company aims to enhance operational efficiency and reduce costs to improve profitability and create greater value for shareholders[15]. - The company continues to deepen cost control measures, with sales and distribution expenses and administrative expenses decreasing by approximately 50% and 11% respectively compared to 2019[9]. - The net cash flow from operating activities for 2020 was RMB 243.7 million, compared to RMB 115.0 million in 2019, indicating a significant improvement in operational efficiency[63]. - The company has strengthened budget, risk, performance, and responsibility management to enhance operational efficiency[101]. Debt and Financing - The company secured a syndicated loan of USD 55 million led by ANZ, improving its debt structure and optimizing funding costs[14]. - The group’s financing costs were RMB 561.8 million, a slight increase from RMB 557.5 million in the previous year, with an average borrowing and bond interest rate of 6.11%[49]. - The company's interest-bearing debt slightly increased to RMB 9,272.8 million as of December 31, 2020, from RMB 9,109.4 million in 2019, with 75.6% classified as long-term debt[70]. - The asset-liability ratio decreased to 71.0% as of December 31, 2020, compared to 72.5% in 2019, reflecting improved financial stability[70]. Projects and Capacity - As of December 31, 2020, the company had a total of 112 service concession projects, including 105 wastewater treatment plants, 2 water supply plants, 3 sludge treatment plants, and 2 recycled water treatment plants[24]. - The total daily treatment capacity for operational wastewater treatment plants was 3,766,500 tons, an increase from 3,461,500 tons in 2019[31]. - The daily total treatment capacity for ongoing projects under construction was 515,000 tons, including 335,000 tons for wastewater treatment plants and 180,000 tons for water supply plants[34]. - The actual average water treatment fee was approximately RMB 1.46 per ton, slightly down from RMB 1.47 per ton in the previous year[31]. Corporate Governance - The board consists of seven members, including four executive directors and three independent non-executive directors[82]. - The board of directors has complied with the requirement of having at least three independent non-executive directors, with one possessing appropriate professional qualifications in accounting or related financial management[105]. - The company has established three committees: the nomination committee, the remuneration committee, and the audit committee[125]. - The board is responsible for major decision-making, including approving policies, overall strategy, and significant transactions[123]. - The company has adopted the standard code for securities trading by directors, ensuring compliance throughout the fiscal year ending December 31, 2020[102]. Risk Management - The company has established a comprehensive risk management framework to ensure effective risk control and decision-making[153]. - The company has identified significant risks in its business planning process, including project schedule risks, government contract risks, corporate culture risks, post-audit pricing risks, and performance management risks[159]. - The internal audit department conducts annual checks on the effectiveness of risk management practices across departments and business units[155]. - The company emphasizes the importance of timely, accurate, and complete communication of risk management information across all departments and business units[155]. Environmental and Social Responsibility - The company has implemented internal recycling programs for consumables to minimize environmental impact[187]. - The company has adopted energy-saving practices in its offices and wastewater treatment plants to improve electricity efficiency[188]. - The company has established compliance procedures to ensure adherence to applicable laws and regulations that significantly impact its operations[189]. Shareholder Relations - The company emphasizes the importance of effective communication with shareholders to enhance understanding of its business performance and strategies[164]. - The company has a structured approach to shareholder rights, ensuring that resolutions are presented individually at shareholder meetings[169]. - The company has a dedicated website for timely updates on its operations, financial data, and corporate governance practices[164].

Municipal Water Treatment and Projects - The company reported a focus on municipal wastewater treatment, with 112 service concession projects established, including 105 wastewater treatment plants, 2 water supply plants, 3 sludge treatment plants, and 2 recycled water treatment plants[15]. - The company aims to enhance profitability and operational efficiency through the expansion of its municipal water treatment sector, leveraging existing projects and exploring new opportunities in the water industry chain[9]. - The company is committed to optimizing its management structure and improving operational efficiency while actively seeking opportunities for expansion in the water industry, including sludge disposal and industrial wastewater treatment[9]. - The company is actively involved in various water environment governance projects, including comprehensive basin management and sponge city construction, through existing PPP and EPC contracts[14]. - The group had 89 operational sewage treatment projects and 14 projects under construction as of June 30, 2020[22]. - The group signed 2 PPP projects and 13 EPC projects, focusing on comprehensive water environment governance[28]. Financial Performance - The total operational revenue for urban water services was RMB 487.5 million, representing a growth of approximately 12% compared to RMB 433.7 million in the same period last year[23]. - The total construction revenue for the six-month period was RMB 717.0 million, an increase of about 25% from RMB 574.4 million in the previous year[24]. - The group recorded total revenue of RMB 1,729.8 million, a 22% increase from RMB 1,412.6 million in the same period last year[31]. - The gross profit margin for the six-month period was approximately 37%, down from about 42% in the previous year[33]. - The company reported a net profit for the period of RMB 232,366 thousand, compared to RMB 188,936 thousand in 2019, marking a 23.0% increase[111]. - Basic and diluted earnings per share rose to RMB 10.93, up from RMB 8.98, indicating strong earnings growth[111]. - The company reported a pre-tax profit of RMB 306,711,000 for the six months ended June 30, 2020, compared to RMB 260,923,000 for the same period in 2019, representing an increase of approximately 17.5%[126]. Shareholder and Ownership Structure - As of June 30, 2020, the company has a significant shareholder, China Water Affairs Group, which acquired approximately 29.52% of the company's issued share capital, providing new opportunities for development[13]. - Sharp Profit Investments Limited holds 44.54% of the company's shares, totaling 953,119,996 shares[79]. - Zhao Sizhen holds 25.42% of the company's shares, totaling 543,828,004 shares[79]. - Baring Private Equity Asia V Holding Limited holds 16.08% of the company's shares, totaling 344,129,996 shares[79]. - The company has a significant number of shares held by major shareholders, indicating concentrated ownership[79]. Debt and Financial Health - The company's debt-to-asset ratio was 72.0% as of June 30, 2020, slightly down from 72.5% as of December 31, 2019[59]. - The total interest-bearing bank borrowings and other borrowings amounted to RMB 8,957.4 million as of June 30, 2020, up from RMB 7,632.6 million as of December 31, 2019, with over 56% of these borrowings subject to floating interest rates[58]. - The company's total bonds payable as of June 30, 2020, were RMB 579.7 million, a decrease from RMB 1,476.8 million as of December 31, 2019[58]. - The company's financial receivables amounted to RMB 9,508.0 million, an increase of RMB 350.0 million from RMB 9,158.0 million at the end of the previous year, mainly due to reclassification from contract assets[45]. - The company's total liabilities decreased to RMB 5,371,206 thousand from RMB 6,282,126 thousand, reflecting better financial health[116]. Cash Flow and Liquidity - Cash flow from operating activities for the first half of 2020 was a net outflow of RMB 32,770,000, an improvement from a net outflow of RMB 159,179,000 in the same period of 2019[126]. - The company's cash and cash equivalents increased significantly to RMB 822.2 million from RMB 225.7 million at the end of the previous year, driven by increased cash inflows from financing and investment activities[52]. - The cash flow from financing activities was RMB 289,604,000 for the first half of 2020, compared to RMB 273,681,000 in the same period of 2019[126]. - The cash flow from investing activities for the six months ended June 30, 2020, was RMB 511,684,000, a significant improvement compared to a cash outflow of RMB 123,628,000 in the same period of 2019[128]. Corporate Governance and Management - The company has adopted corporate governance principles and has complied with the corporate governance code as of June 30, 2020[69]. - The company appointed a new company secretary on January 20, 2020, following the resignation of the previous secretary[86]. - The company has established a remuneration committee to review and approve management's compensation schemes[96]. - The nomination committee has adopted a board diversity policy to enhance board efficiency and ensure a balance of skills and experience[97]. Capital Expenditures and Investments - Capital expenditures for the six months ended June 30, 2020, totaled RMB 111,396,000, including investments in property, plant, equipment, and intangible assets[153]. - The company incurred RMB 108,281,000 in intangible asset purchases, specifically for franchise rights, up from RMB 88,227,000 in 2019[128]. - The company reported a total capital expenditure of RMB 242,395,000 for the first half of 2020, which includes investments in property, plant, and equipment[167]. Regulatory and Compliance - The company adopted revised International Financial Reporting Standards, which clarified the definition of a business, effective from January 1, 2020[140]. - The interim financial results were prepared in accordance with International Accounting Standard 34 and were reviewed by Ernst & Young[107][109].

Financial Performance - Total revenue decreased by approximately 7% to RMB 2,815.2 million due to a reduction in construction service income[13] - Actual sewage treatment volume increased by 2% to 1,027.5 million tons, contributing to an increase in operational service revenue from RMB 819.7 million to RMB 894.0 million[13] - Gross profit rose by approximately 6% to RMB 1,162.6 million compared to RMB 1,093.2 million in the previous year[13] - Profit attributable to equity shareholders increased by approximately 24% to RMB 376.9 million, with basic earnings per share at RMB 0.1854[13] - Net asset value per share increased by approximately 7% to RMB 2.26 as of December 31, 2019[13] - The total operating revenue for urban water services reached RMB 894.0 million, representing a growth of approximately 9% compared to RMB 819.7 million in the previous year[36] - The total revenue from water environment comprehensive governance projects was RMB 203.9 million, a year-on-year decrease of about 55% from RMB 457.3 million[38] - The group had total revenue from rural sewage treatment projects of RMB 74.7 million, a year-on-year decrease of approximately 26% from RMB 101.6 million[40] - The gross profit margin increased to approximately 41%, up 5 percentage points from about 36% in the previous year[43] - Other income and gains amounted to RMB 182.0 million, a decrease of approximately 17% from RMB 218.5 million in the previous year[47] Operational Highlights - The company plans to focus on municipal sewage treatment and explore opportunities for upgrading and expansion, including increasing water prices and sewage treatment volume[14] - The company will also explore extended industry chains such as reclaimed water reuse and urban drainage network operation and maintenance[14] - The daily sewage treatment capacity of operational projects was 3,461,500 tons, an increase from 3,116,500 tons in the previous year, while the actual total treatment volume for the year was 1,027.5 million tons, a slight increase of 2% year-on-year[32] - The group confirmed construction revenue of RMB 1,040.4 million for 28 projects, a decrease of approximately 5% from RMB 1,098.9 million in the previous year, mainly due to a slight reduction in the number of projects under construction[37] - The average water treatment fee was approximately RMB 1.47 per ton, compared to RMB 1.39 per ton in the previous year[32] - The group aims to focus on urban water services to obtain stable cash flow and seeks higher quality market opportunities through new project investments[22] - The group has established 86 operational sewage treatment projects, 1 recycled water treatment project, and 3 sludge treatment projects in mainland China as of December 31, 2019[32] - The group plans to continue expanding its urban water treatment industry chain to enhance profitability and competitiveness[26] Cost Management - Cost control measures led to a significant reduction in selling and distribution expenses and administrative expenses, down 65% and 14% to RMB 5.0 million and RMB 243.8 million respectively[13] - Financing costs increased to RMB 557.5 million, a rise of approximately 12% from RMB 498.6 million in the previous year[51] - Sales and distribution expenses were RMB 5.0 million, a significant decrease of approximately 65% from RMB 14.2 million in the previous year[48] - Administrative expenses were RMB 243.8 million, a decrease of approximately 14% from RMB 284.5 million in the previous year[49] Shareholder and Investment Activities - The acquisition of approximately 29.52% of the company's issued share capital by China Water Affairs Group Limited positioned it as the largest single shareholder, providing new opportunities for development[13] - The group has become the single largest shareholder following the acquisition of approximately 29.52% of the issued share capital by its wholly-owned subsidiary[21] Cash Flow and Financial Position - The net cash flow from operating activities for the year ended December 31, 2019, was RMB 115.0 million, compared to a cash outflow of RMB 126.7 million in 2018[68] - As of December 31, 2019, cash and cash equivalents were RMB 225.7 million, a decrease of RMB 750.5 million from RMB 976.2 million in 2018, primarily due to increased cash outflows from financing activities[65] - The company's total interest-bearing bank loans and other borrowings as of December 31, 2019, amounted to RMB 7,632.6 million, an increase from RMB 7,096.0 million in 2018[75] - The total amount of corporate bonds as of December 31, 2019, was RMB 1,476.8 million, down from RMB 2,140.5 million in 2018[76] - The company's debt-to-asset ratio was 70% as of December 31, 2019, unchanged from 70% in 2018[76] Management and Governance - The company has a strong management team with over 25 years of experience in the environmental protection and wastewater treatment industry[89] - The management team includes individuals with extensive experience in capital markets, business promotion, and corporate management, enhancing the company's strategic capabilities[93] - The company has a focus on risk control and investor relations, led by experienced executives[99] - The board of directors consists of seven members, including four executive directors and three independent non-executive directors, responsible for managing and operating the group's business[87] - The company has established a national engineering laboratory for urban sewage treatment and resource utilization technology[114] - The company has adhered to the corporate governance code and has made efforts to improve financial risk control, project investment decision-making, and information disclosure[129] Risk Management - The company has a comprehensive internal control and risk management system in place, reviewed by the audit committee[169] - The board is responsible for the overall risk management and internal control systems to protect the interests of the company and its shareholders[178] - The audit committee continuously supervises and reviews the effectiveness of the risk management and internal control systems, which are deemed sufficient and effective[182] - The company allocates resources to the internal control and risk management systems based on COSO standards to ensure reasonable assurance against significant misstatements or losses[178] Employee and Organizational Structure - The group employed 2,313 employees as of December 31, 2019, with compensation packages generally determined by market conditions and individual performance[81] - The group has established a comprehensive organizational structure to manage the risks it faces[183]

Business Strategy and Operations - The company will continue to focus on the wastewater treatment business, leveraging over 20 years of industry experience to adopt a prudent expansion strategy while enhancing existing project profitability through upgrades and expansions[10]. - The company plans to optimize its management structure and implement flat management to enhance operational efficiency and reduce operating costs[12]. - The company will actively establish strategic partnerships with upstream and downstream enterprises to expand its customer network and enhance synergies[13]. - The company is committed to improving its operational cash flow and profitability by revitalizing inefficient assets, including disposing of equity stakes and fixed assets[13]. - The company will continue to explore opportunities in the water industry chain, including sludge disposal, drainage facility operation and construction, reclaimed water reuse, and industrial wastewater treatment[13]. - The company is focused on internal management innovation and performance-based compensation to boost employee motivation and enhance competitive advantage[13]. - The group aims to focus on urban water services to obtain stable cash flow while seeking higher quality market opportunities through new project investments[18]. - The group is committed to the development of environmental protection businesses through resource integration and departmental mergers[17]. Financial Performance - The operational revenue from urban water services for the six months ended June 30, 2019, was RMB 433.7 million, representing a year-on-year increase of approximately 7% from RMB 404.5 million[30]. - The total construction revenue for 27 projects recognized during the six months ended June 30, 2019, was RMB 574.4 million, a year-on-year increase of about 5% from RMB 546.5 million[31]. - The group recorded revenue of RMB 1,412.6 million for the six months ended June 30, 2019, a decrease of approximately 12% compared to RMB 1,607.5 million in the same period last year[38]. - Total revenue from water environment comprehensive governance projects was RMB 72.6 million, a year-on-year decrease of about 79% from RMB 349.5 million[33]. - The group’s sales cost was RMB 817.3 million, a reduction of approximately 22% from RMB 1,049.6 million in the previous year, primarily due to decreased construction costs[39]. - Gross margin increased to approximately 42%, up 7 percentage points from about 35% in the same period last year, attributed to higher construction profit margins from completed EPC projects[40]. - Other income and gains amounted to RMB 68.2 million, a decrease of about 22% from RMB 87.5 million in the previous year[41]. - Financing costs increased to RMB 273.7 million, a rise of approximately 22% from RMB 224.0 million, due to higher average interest rates on bank loans and bonds[45]. - The net profit for the period was RMB 188,936 thousand, representing a slight increase of 1.3% from RMB 185,513 thousand in the previous year[142]. - Basic and diluted earnings per share for the parent company were RMB 8.98, compared to RMB 8.93 in the same period last year[142]. - Total comprehensive income for the period was RMB 76,736 thousand, down 15.8% from RMB 91,163 thousand in 2018[142]. Assets and Liabilities - As of June 30, 2019, financial receivables were RMB 7,957.1 million, an increase of RMB 125.5 million from RMB 7,831.6 million at the end of 2018[51]. - Contract assets rose to RMB 3,007.3 million, an increase of RMB 515.9 million from RMB 2,491.4 million at the end of 2018, driven by increased construction from BOT, PPP, and EPC contracts[52]. - Trade receivables and bills receivable were RMB 1,385.1 million, an increase of RMB 89.1 million from RMB 1,296.0 million at the end of 2018, mainly due to increased receivables from urban water projects[53]. - The group’s asset-liability ratio as of June 30, 2019, was 71%, compared to 70% at the end of 2018[68]. - The total interest-bearing bank borrowings and other borrowings as of June 30, 2019, was RMB 7,537.3 million, an increase from RMB 7,096.0 million at the end of 2018[67]. - The total non-current liabilities amounted to RMB 6,333,126, a slight decrease from RMB 6,336,123 as of December 31, 2018[149]. - The total liabilities decreased to RMB 522,797 thousand from RMB 488,034 thousand, indicating a reduction of 7.1%[159]. Cash Flow and Financing - The net cash flow used in operating activities for the six months ended June 30, 2019, was RMB (159.2) million, compared to RMB (121.4) million for the same period in 2018[60]. - The net cash outflow from financing activities was RMB 539.1 million for the six months ended June 30, 2019, compared to an inflow of RMB 178.5 million for the same period in 2018[60]. - The group had a total of 2,172 employees as of June 30, 2019, with compensation generally reviewed annually based on performance[71]. - The company reported a decrease in trade receivables and other receivables by RMB 1,209 thousand, compared to no impairment in the previous year[159]. - The company reported a net cash outflow from financing activities of RMB (539,051) thousand, contrasting with a net inflow of RMB 178,517 thousand in the previous year[162]. Corporate Governance and Management - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange and believes it has complied with the code during the reporting period[77]. - The company is enhancing budget, risk, performance, and accountability management to improve operational efficiency[77]. - Significant changes in the board included resignations of several executive directors effective April 4, 2019[97][98][99][100][101]. - The company appointed Mr. Duan Linan as the CEO effective April 9, 2019[108]. - Mr. Zhou Wei has been appointed as the CFO effective April 9, 2019[109]. - The board is focused on optimizing management strategies and mechanisms to enhance control effectiveness[77]. Accounting Standards and Compliance - The company adopted IFRS 16 "Leases" effective January 1, 2019, which requires all leases to be recognized on the balance sheet[182]. - The transition impact of IFRS 16 resulted in the recognition of lease liabilities at the present value of remaining lease payments as of January 1, 2019[189]. - The company has chosen not to recognize right-of-use assets and lease liabilities for leases with a term of 12 months or less[188]. - The company will continue to assess the impact of new accounting standards on its financial reporting[181]. - The company will measure right-of-use assets at cost less accumulated depreciation and impairment losses[195].

Financial Performance - For the year ended December 31, 2018, the company achieved revenue of RMB 3,021.3 million, representing an increase of approximately 20% compared to 2017[11] - The profit attributable to equity shareholders for the same period was RMB 303.4 million, a decrease of about 27% year-on-year, with basic earnings per share of RMB 0.1484[11] - The total operational revenue from urban water services was RMB 819.7 million, representing an 18% increase compared to RMB 695.0 million in the previous year[42] - The total actual processing volume for the year was 1,004.9 million tons, a year-on-year increase of approximately 14% from 878.6 million tons[41] - The group recorded total revenue of RMB 3,021.3 million for the year, a 20% increase from RMB 2,523.9 million in the previous year, primarily due to increased construction revenue[52] - The construction revenue for the year was RMB 1,098.9 million, reflecting a 22% increase from RMB 901.4 million in the previous year, driven by the number of new BOT and PPP projects[43] - The total revenue from rural sewage treatment projects was RMB 101.6 million, a significant increase of 48% compared to RMB 68.6 million in the previous year[48] - The total construction revenue from water environment comprehensive governance projects was RMB 457.3 million, a 17% increase from RMB 390.9 million in the previous year[47] Operational Capacity and Projects - As of December 31, 2018, the company signed a total of 107 franchise service agreements, including 100 wastewater treatment projects, 3 water supply projects, 3 sludge treatment projects, and 1 reclaimed water treatment project[11] - The daily processing capacity of the company reached approximately 4,268,350 tons, an increase of about 4% from 4,113,350 tons on December 31, 2017[11] - The company has signed 107 service concession projects, including 100 wastewater treatment plants, with a total daily treatment capacity of 4,268,350 tons as of December 31, 2018, representing a 4% increase from 4,113,350 tons in 2017[32] - The new wastewater treatment projects acquired in 2018 have a total daily treatment capacity of 315,000 tons, while the existing projects have a daily treatment capacity of 160,000 tons[32] Regulatory Environment - The implementation of the Environmental Protection Tax Law in China on January 1, 2018, has made the collection of pollution discharge fees more stringent, benefiting the wastewater treatment industry[12] - The State Council's institutional reform in April 2018 established the Ministry of Ecology and Environment, which is responsible for pollution discharge supervision and enforcement, enhancing regulatory responsibilities[12] - In July 2018, the National Development and Reform Commission issued opinions to innovate and improve the pricing mechanism for wastewater treatment, aiming to establish a dynamic adjustment mechanism for wastewater treatment fees[12] Financial Management and Strategy - The company aims to enhance existing project profitability and improve cash flow through upgrades and expansions, focusing on the wastewater treatment sector[22] - The company plans to seek more efficient financing methods to strengthen capital, reduce debt ratios, and lower financing costs in response to the challenges posed by the interest rate hike cycle[22] - The company will continue to optimize internal management and enhance operational efficiency to improve profitability[18] - The company has established strategic partnerships with upstream and downstream enterprises to expand its customer network and enhance competitive advantages[23] Human Resources and Talent Development - The company is committed to improving its talent development programs and performance-based compensation to enhance its competitive edge[18] - As of December 31, 2018, the group employed 2,308 staff members, with compensation packages reviewed annually based on market conditions and individual performance[100] Corporate Governance - The audit committee, consisting of three independent non-executive directors, reviewed and approved the financial statements for the year ended December 31, 2018[114] - The company has maintained compliance with listing rules, ensuring at least three independent non-executive directors, with one possessing appropriate professional qualifications in accounting or related financial management[182] - The board of directors consists of nine members, including six executive directors and three independent non-executive directors, responsible for managing the group's business[124] - The company has established a nomination committee to oversee the composition of the board and assess the independence of non-executive directors[192] Future Outlook and Growth - The company is optimistic about future prospects and profitability, aiming to invest in new projects for better market opportunities[28] - The company has set a future revenue guidance of HKD 1.5 billion for the next fiscal year, projecting a growth rate of 25%[170] - The company is exploring potential mergers and acquisitions to enhance its market position and operational capabilities[140] Challenges and Risks - Financing costs increased by approximately 40% to RMB 498.6 million, up from RMB 354.9 million in the previous year, driven by higher interest from bank loans and corporate bonds[62] - The effective tax rate for the year was approximately 32%, an increase of 12 percentage points from 20% in the previous year, primarily due to the reversal of unutilized tax losses[69] - The company reported a loss of RMB 2.3 million from joint ventures, down from a profit of RMB 2.6 million in the previous year, attributed to lower-than-expected project execution progress[68] Shareholder Returns - The company did not recommend a final dividend for the year ended December 31, 2018, compared to a dividend of RMB 0.02 per share for the previous year[107] - The company repurchased a total of 28,980,000 ordinary shares at a total cost of approximately HKD 37,226,370 during the year ended December 31, 2018[120]