Financial Performance - For the year ended December 31, 2023, the profit attributable to shareholders increased by 60% to RMB 1,895,700,000 from RMB 1,181,400,000 in the previous year[3]. - EBITDA for the year was RMB 8,931,300,000, a 25% increase from RMB 7,158,200,000 last year[3]. - The total revenue for the year was RMB 24,519,374,000, up from RMB 21,484,840,000, representing a growth of approximately 9.5%[4]. - The basic and diluted earnings per share for the year were RMB 18.24 and RMB 18.21, respectively, compared to RMB 11.33 and RMB 11.31 in the previous year[4]. - The company reported a net profit of RMB 3,064,327,000 for the year, compared to RMB 2,335,171,000 in the previous year[5]. - The company reported a pre-tax profit of RMB 4,028,439,000 for the year ended December 31, 2023, compared to RMB 3,265,457,000 for the year ended December 31, 2022[25][32]. - The company's net profit attributable to shareholders for 2023 was RMB 1,895,681,000, a significant increase of 60.5% compared to RMB 1,181,430,000 in 2022[35]. - The total proposed final dividend for 2023 is RMB 1,419,586,000, slightly up from RMB 1,396,137,000 in 2022, maintaining the same per share dividend of 8.7 HKD cents[33]. Assets and Liabilities - The total assets as of December 31, 2023, amounted to RMB 165,493,193,000, an increase from RMB 161,751,644,000 in the previous year[7]. - The company’s total non-current assets increased to RMB 125,108,357,000 from RMB 120,756,110,000 year-on-year[7]. - As of December 31, 2023, total equity reached RMB 54,133,475,000, an increase of 3.7% from RMB 52,207,300,000 in 2022[8]. - Non-current liabilities totaled RMB 68,861,047,000, up 6.1% from RMB 64,892,125,000 in the previous year[8]. - Current liabilities decreased to RMB 42,498,671,000, down 4.8% from RMB 44,652,219,000 in 2022[8]. - Total liabilities amounted to RMB 111,359,718,000, reflecting a 1.7% increase from RMB 109,544,344,000 in 2022[8]. - The company reported a net current liability of RMB 2,000,000,000 and capital commitments of approximately RMB 18,100,000,000 as of December 31, 2023[9]. - The company’s total borrowings rose to RMB 74,244,700,000 in 2023 from RMB 72,243,900,000 in 2022, reflecting an increase of approximately 2.8%[117]. Revenue Breakdown - The total operating revenue for the year ended December 31, 2023, was RMB 24,519,374,000, representing an increase of 14.5% compared to RMB 21,484,840,000 for the year ended December 31, 2022[25][27]. - Revenue from wastewater and recycled water treatment services was RMB 8,643,409,000 for the year ended December 31, 2023, compared to RMB 8,491,352,000 in the previous year[29]. - The company’s revenue from mainland China was RMB 23,159,277,000, up from RMB 20,155,038,000 in the previous year[27]. - The revenue from urban resource services surged by 131% to RMB 5,057.6 million in 2023, compared to RMB 2,184.9 million in 2022[57]. - The company’s total revenue from technical services and equipment sales decreased by 16% to RMB 2,459.1 million in 2023[57]. Expenses and Costs - The financial expenses for the year ended December 31, 2023, totaled RMB 3,260,857,000, an increase from RMB 2,745,678,000 in the previous year[31]. - The total sales cost for the year ended December 31, 2023, was RMB 15,518,621,000, compared to RMB 13,024,158,000 in the previous year[25][26]. - Management expenses increased to RMB 3,317,400,000 from RMB 2,973,300,000, primarily due to the consolidation of North Control Urban Resources[92]. - Other expenses, including headquarters costs and financial expenses, totaled RMB 3,260,900,000[51]. Cash Flow and Investments - The cash and cash equivalents decreased to RMB 10,215,161,000 from RMB 11,584,201,000 year-on-year[7]. - The company reported a total tax expense of RMB 964,112,000 for 2023, compared to RMB 930,286,000 in 2022, reflecting an increase of 3.6%[33]. - The total capital expenditure for the year amounted to RMB 6,834,800,000, an increase from RMB 6,299,400,000 as of December 31, 2022[119]. - The company issued perpetual capital instruments amounting to RMB 2,000,000,000 during the year, contributing to the increase in equity instruments[110]. Strategic Developments - The company has integrated the concept of "Future New Water Services" into its strategic development, focusing on sustainable innovation and technology[120]. - The company plans to continue expanding its market presence and developing new technologies in the water treatment sector[48]. - The company aims to lead asset-light transformation through a "Technology Development Platform" in 2024[122]. - The company plans to distribute a final dividend of HKD 0.087 per share, pending approval at the annual general meeting on June 5, 2024[129]. Corporate Governance - The company has adhered to all corporate governance codes as per the listing rules for the year ending December 31, 2023[132]. - The audit committee, composed of three independent non-executive directors, has reviewed and approved the financial results for the year ending December 31, 2023[134].

Financial Performance - The company achieved a total revenue of HKD 13,730,787,000 for the six months ended June 30, 2023, representing a year-on-year increase of 29%[10]. - The net profit attributable to shareholders reached HKD 1,556,538,000, marking a significant year-on-year increase of 124%[10]. - Operating revenue rose by 29% to HKD 13,730,800,000, driven by contributions from BOT water service projects and the consolidation of North Control Urban Resources Group[27]. - The group's total revenue for the period reached HKD 13,730.8 million, with a gross profit margin of 27% and attributable profit of HKD 3,793.9 million[29]. - The company reported a significant increase in attributable profit from joint ventures and associates, amounting to HKD 81.1 million[30]. - The company's net profit attributable to shareholders for the six months was HKD 1,556,538 thousand, compared to HKD 694,029 thousand in 2022, representing a 124.8% increase[118]. - Basic earnings per share increased to HKD 0.1531 from HKD 0.0664, reflecting a growth of 130.4%[118]. - The gross profit margin for wastewater and reclaimed water treatment services decreased to 57% from 60%, while the gross profit margin for overseas subsidiaries dropped to 16% from 23%[36]. Dividends and Shareholder Returns - The company declared an interim cash dividend of HKD 0.07 per share to reward shareholders for their continued support[10]. - The company’s cash dividends paid for the year-end 2022 amounted to HKD 874,055,000[123]. Operational Capacity and Projects - The total design capacity increased to 43,810,385 tons per day, with a new design scale of 534,672 tons per day added during the reporting period[10]. - The group operates a total of 1,447 water plants and township sewage treatment facilities, with a total daily design capacity of 43,810,385 tons as of June 30, 2023[42]. - The company is actively developing a new collaborative development model that includes municipal wastewater and integrated water supply networks[10]. - The group has established service concession arrangements for several township sewage treatment projects, with a total processing capacity of 13,000 tons per day[43]. Acquisitions and Investments - The company completed the acquisition of 100% equity in Honghe Water Industry Investment Co., Ltd. and Water Wealth County Water Industry Investment Co., Ltd. in Yunnan Province[11]. - The group did not have any significant investments or acquisitions during the six months ended June 30, 2023[112]. Financial Position and Liabilities - Total liabilities as of June 30, 2023, were HKD 9,948,277,000, a decrease from HKD 11,345,842,000 as of December 31, 2022, representing a reduction of approximately 12.3%[170]. - The debt-to-equity ratio increased to 1.24 as of June 30, 2023, from 1.16 as of December 31, 2022, primarily due to increased borrowings and decreased equity[108]. - Financial expenses increased from HKD 1,010,500,000 to HKD 1,493,300,000 due to higher average borrowing balances and interest rates[78]. Cash Flow and Financial Management - For the six months ended June 30, 2023, the company reported a net cash flow from operating activities of negative HKD 441,259,000, a significant decrease compared to HKD 750,362,000 for the same period in 2022[127]. - The company reported a decrease in cash flow from investing activities, totaling negative HKD 849,895,000 for the first half of 2023, compared to negative HKD 950,043,000 in the same period of 2022[127]. - The net increase in cash and cash equivalents for the first half of 2023 was HKD 1,085,765,000, down from HKD 3,866,483,000 in the same period of 2022[129]. Market Expansion and Strategy - The company is focused on sustainable development, integrating it into its long-term strategy to ensure high-quality and sustainable growth[20]. - The group is actively pursuing market expansion and innovation to create new growth points in its business[20]. - The company is committed to becoming a world-class water environment service provider, emphasizing green and sustainable development[24]. Technical and Operational Improvements - The company is implementing technical upgrades at the Zhucheng Wastewater Treatment Plant to ensure stable operations following its acquisition[11]. - The group successfully implemented new technologies, including the BEAOA and BEAMX processes, enhancing its core technical reserves[20]. - The group aims to enhance operational efficiency through digitalization and the optimization of its management systems[23]. Regional Performance - Revenue from mainland China was HKD 13,012,265,000, a significant increase from HKD 9,926,751,000 in the prior year[145]. - The actual processing volume in the southern region of China was 675,900,000 tons, generating revenue of 989,500,000 HKD and a profit attributable to shareholders of 375,700,000 HKD[48]. - The western region of China recorded a processing volume of 358,600,000 tons, with revenue of 911,300,000 HKD and a profit attributable to shareholders of 458,500,000 HKD[50]. Employee and Operational Costs - The total employee cost for the six months ended June 30, 2023, was HKD 2,846,122,000, significantly higher than HKD 1,623,328,000 for the same period last year[111]. - Management expenses increased to HKD 1,464,000,000 from HKD 1,326,100,000, primarily due to the consolidation of North Control Urban Resources[76]. Taxation and Compliance - Income tax expense included current tax of HKD 404,400,000, with an effective tax rate of approximately 17%, lower than the standard rate of 25%[82]. - The total tax expense for the period was HKD 627,122,000, compared to HKD 535,408,000 in the same period last year, reflecting a 17.1% increase[155].

[Performance Summary](index=1&type=section&id=Performance%20Summary) This section highlights key financial metrics, showing significant profit and EBITDA growth for the first half of 2023 [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) Profit attributable to shareholders surged 124% YoY to HK$1.557 billion, with a proposed interim dividend of HK 7.0 cents per share 2023 Interim Results Summary | Indicator | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 | Change | | :--- | :--- | :--- | :--- | | **Profit attributable to company's shareholders** | HK$1,556,500,000 | HK$694,000,000 | +124% | | **EBITDA** | HK$5,373,800,000 | HK$3,811,800,000 | +41% | | **Basic earnings per share** | 15.31 HK cents | 6.64 HK cents | - | | **Diluted earnings per share** | 15.28 HK cents | 6.61 HK cents | - | | **Proposed interim dividend** | 7.0 HK cents | 7.0 HK cents | - | [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's financial performance and position, detailing revenue growth and changes in assets and liabilities [Condensed Consolidated Income Statement](index=2&type=section&id=Condensed%20Consolidated%20Income%20Statement) Revenue grew 29% YoY to HK$13.73 billion, driving a 124% increase in profit attributable to the company's shareholders Key Income Statement Data (For the six months ended June 30) | Indicator | 2023 (Unaudited) | 2022 (Unaudited) | YoY Change | | :--- | :--- | :--- | :--- | | **Revenue** | HK$13,730,787 thousand | HK$10,645,939 thousand | +29.0% | | **Gross Profit** | HK$5,034,692 thousand | HK$4,607,712 thousand | +9.3% | | **Profit from operations** | HK$4,220,913 thousand | HK$2,866,615 thousand | +47.2% | | **Profit for the period** | HK$2,224,598 thousand | HK$1,408,079 thousand | +57.9% | | **Profit attributable to company's shareholders** | HK$1,556,538 thousand | HK$694,029 thousand | +124.3% | | **Basic earnings per share** | 15.31 HK cents | 6.64 HK cents | +130.6% | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) Total assets stood at HK$181.85 billion, while net current assets turned positive from a net liability position at year-end Key Statement of Financial Position Data | Indicator | June 30, 2023 (Unaudited) | December 31, 2022 (Audited) | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | HK$181,848,521 thousand | HK$183,945,711 thousand | -1.1% | | **Total Liabilities** | HK$124,717,516 thousand | HK$124,482,210 thousand | +0.2% | | **Total Equity** | HK$57,131,005 thousand | HK$59,463,501 thousand | -3.9% | | **Net current assets** | HK$1,367,213 thousand | (HK$4,155,323) thousand | Turned positive | [Summary of Notes to the Financial Statements](index=6&type=section&id=Summary%20of%20Notes%20to%20the%20Financial%20Statements) The Group's principal activities include sewage treatment and water supply, with an interim dividend of HK 7.0 cents per share declared - The Group is principally engaged in sewage treatment, water supply, construction of comprehensive treatment projects, technical consulting, and environmental sanitation services across mainland China, Southeast Asia, Europe, and Oceania[8](index=8&type=chunk) - The Board declared an interim cash dividend of **HK 7.0 cents per ordinary share**, consistent with the prior year, totaling approximately HK$703 million[24](index=24&type=chunk) - **Basic earnings per share was 15.31 HK cents**, calculated based on profit attributable to shareholders of HK$1.531 billion (adjusted for perpetual capital instrument distributions) and a weighted average of approximately 9.998 billion ordinary shares[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) [Management Discussion and Analysis](index=20&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth analysis of financial results, business operations, and the company's future strategic direction [Financial Performance Analysis](index=20&type=section&id=Financial%20Performance%20Analysis) Revenue grew 29% to HK$13.73 billion, driven by BOT projects and the new urban resources segment, which contributed 18% of revenue Contribution of Business Segments to Profit Attributable to Shareholders (H1 2023) | Business Segment | Revenue (HK$ million) | % of Total Revenue | Profit Attributable to Shareholders (HK$ million) | % of Total Business Profit | | :--- | :--- | :--- | :--- | :--- | | **Water Treatment Services** | 6,326.8 | 46% | 2,720.6 | 71% | | **Water Environment Treatment Construction Services** | 3,667.9 | 27% | 779.1 | 21% | | **Technical Services and Equipment Sales** | 1,195.0 | 9% | 214.8 | 6% | | **Urban Resources Services** | 2,541.1 | 18% | 79.4 | 2% | | **Total Business Performance** | **13,730.8** | **100%** | **3,793.9** | **100%** | - Compared to the same period last year, **revenue increased by 29%**, mainly due to a 48% increase in BOT water project construction revenue and the addition of urban resources services revenue; however, overall business performance (profit attributable to shareholders) remained flat due to a 55% decrease in comprehensive treatment project construction revenue[45](index=45&type=chunk) [Business Review](index=25&type=section&id=Business%20Review) The Group operated 1,447 water plants with a total daily design capacity of 43.81 million tons, with BOT project revenue recovering post-pandemic - As of June 30, 2023, the Group owned a total of **1,447 water plants** and township sewage treatment facilities, with a total daily design capacity of **43,810,385 tons**[46](index=46&type=chunk)[47](index=47&type=chunk) - The Group has **halted new investments in comprehensive water environment treatment projects**, leading to a decrease in related construction revenue, which will continue to decline as existing projects are completed[59](index=59&type=chunk) - Construction of BOT water projects saw a **48% YoY increase in revenue to HK$3.3 billion** and a **48% increase in profit attributable to shareholders to HK$426 million**, as construction sites fully resumed operations post-pandemic[60](index=60&type=chunk) - Since June 30, 2022, the Group has consolidated the results of Beijing Enterprises Urban Resources, which contributed **revenue of HK$2.541 billion** and **profit attributable to the Group of HK$79.4 million** during the period[62](index=62&type=chunk) [Detailed Financial Analysis](index=33&type=section&id=Detailed%20Financial%20Analysis) The gross profit margin declined to 37% due to a revenue mix shift, while the gearing ratio rose slightly to 1.24 - The **gross profit margin decreased from 43% to 37%**, primarily due to a change in the revenue mix with the consolidation of the lower-margin (23%) urban resources services[65](index=65&type=chunk) - Net other operating expenses **decreased significantly from HK$1.801 billion to HK$346 million**, as the prior period included one-off items such as a HK$1.091 billion loss on the deemed disposal of an associate, Shandong Hi-speed New Energy[68](index=68&type=chunk) - Total receivables from contract customers, service concession arrangements, and trade receivables amounted to **HK$115.96 billion**, a slight decrease from the beginning of the period mainly due to RMB depreciation[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - As of June 30, 2023, the Group's **gearing ratio (net debt/total equity) was 1.24**, up from 1.16 at the end of 2022, mainly due to an increase in bank and other borrowings and a decrease in total equity from RMB depreciation[88](index=88&type=chunk) [Future Outlook](index=42&type=section&id=Future%20Outlook) The Group will advance its "New Future Water Services" plan, leveraging digitalization and innovation to become a world-class service provider - The Group has integrated sustainable development into its long-term strategy and proposed the **"New Future Water Services" development plan** to promote sustainability through technological and management innovation[90](index=90&type=chunk) - The company will enhance operational efficiency through **digital systems (like SED)** and upgrade its regional intensive management mechanism[92](index=92&type=chunk) - Responding to China's call for high-quality green development and the **"Beautiful China" initiative**, the Group will adhere to sustainable practices, striving towards its vision of becoming a "world-class water and environmental services provider"[93](index=93&type=chunk) [Other Corporate Information](index=44&type=section&id=Other%20Corporate%20Information) This section covers capital structure, risk management, dividend policy, and corporate governance practices [Capital, Liabilities, and Risks](index=44&type=section&id=Capital%2C%20Liabilities%2C%20and%20Risks) The Group faces RMB exchange rate risk and has pledged certain assets for borrowings, with employee numbers increasing due to consolidation - As of June 30, 2023, the Group had **72,974 employees**, with staff costs increasing significantly due to the consolidation of Beijing Enterprises Urban Resources[94](index=94&type=chunk) - Certain Group assets, including **concession rights, land and buildings, investment properties, bank balances, and trade receivables**, have been pledged as security for bank and other borrowings[95](index=95&type=chunk)[96](index=96&type=chunk) - As most of the Group's operations are in China with transactions denominated in RMB, it is exposed to **RMB exchange rate fluctuation risk**, which may affect the Group's net asset value[97](index=97&type=chunk) [Dividends and Corporate Governance](index=46&type=section&id=Dividends%20and%20Corporate%20Governance) The Board declared an interim dividend of HK 7.0 cents per share and confirmed compliance with all corporate governance code provisions - The Board of Directors resolved to declare an **interim cash dividend of HK 7.0 cents per share**, with the record date being October 4, 2023[101](index=101&type=chunk)[102](index=102&type=chunk) - The Board believes that the company has **complied with all code provisions** of the Corporate Governance Code as set out in Appendix 14 of the Listing Rules during the reporting period[103](index=103&type=chunk) - These interim results are **unaudited but have been reviewed and approved** by the company's Audit Committee[105](index=105&type=chunk)

Financial Performance - For the year ended December 31, 2022, the total design capacity reached 44,287,093 tons/day, with operating revenue of HKD 24,982,372,000, a decrease of 10% year-on-year [7]. - The net profit attributable to shareholders was HKD 1,374,151,000, representing a year-on-year decrease of 67%, with basic earnings per share of HKD 0.1318 [7]. - The company's profit attributable to shareholders decreased by 67% to HKD 1,374,200,000 due to a 10% decline in revenue from water environment governance construction services, totaling HKD 24,982,400,000 [17]. - The company reported a total revenue of HKD 27,880.1 million for the year, with a profit of HKD 8,321.5 million [22]. - The total revenue from the company's main business segments was HKD 24,982.4 million, a decrease of 10% from HKD 27,880.1 million in 2021 [27]. - The company expressed gratitude to shareholders, customers, employees, and partners for their continued support [16]. Revenue Sources - Revenue from wastewater and reclaimed water treatment services in mainland China grew by over 20% [7]. - Revenue from wastewater and reclaimed water treatment services in China reached HKD 9,388.3 million, contributing 38% to total revenue, with a gross margin of 57% [18]. - The overseas wastewater treatment services generated revenue of HKD 4,229.7 million, with a gross margin of 57% [18]. - The construction of BOT water projects contributed HKD 4,626.1 million in revenue, with an 18% gross margin [19]. - Revenue from comprehensive governance projects decreased by HKD 1,612,500,000 to HKD 1,458,900,000, compared to HKD 3,071,400,000 last year [41]. - Revenue from BOT water projects was HKD 4,626,100,000, a significant decline from HKD 9,533,200,000 in the previous year, with attributable profit decreasing to HKD 617,300,000 from HKD 1,191,800,000 [43]. Operational Efficiency and Strategy - The company aims to enhance operational efficiency and cash flow while promoting a light asset transformation [6]. - The company is focusing on strategic clarity, integrating municipal wastewater, water supply, reclaimed water, and sludge business as part of its asset acquisition strategy [7]. - The company aims to enhance operational efficiency and achieve high-quality, sustainable development, aligning with the national "3060" dual carbon strategy [16]. - The company plans to leverage technology and model innovation to create new growth points in business [16]. - The group established 58 regional companies and organizations to enhance customer service and trust, achieving a new signed water volume of 3,414,442 tons per day [9]. - The group is cultivating new growth points in its business through multi-track development strategies [7]. Environmental and Social Responsibility - The environmental industry is expected to experience high-quality growth, aligning with the "14th Five-Year Plan" and carbon neutrality goals [7]. - The company emphasizes social responsibility by ensuring personnel and production safety, maintaining stable water supply standards [7]. - The company is committed to becoming a trusted, leading global water environment service provider [16]. Governance and Board Structure - The board consists of a diverse group of members, including executive, non-executive, and independent directors, ensuring a range of expertise and governance [75]. - The board aims to avoid a single-gender composition and has appointed a female executive director since January 3, 2020 [85]. - The board's diversity policy was adopted in 2013 to enhance governance and maintain competitive advantage [84]. - The company has established a succession plan for the board, regularly reviewing and discussing it to identify suitable candidates with diverse skills [88]. - The audit committee, composed of three independent non-executive directors, is responsible for reviewing the company's financial statements and overseeing risk management and internal controls [92]. Risk Management - The company has adopted a risk management framework based on the "three lines of defense" model, which includes business units, risk management department, and audit department [102]. - The risk management department identified potential risks affecting financial, operational, and compliance objectives, including regulatory and market competition risks [104]. - The board of directors is responsible for assessing the nature and extent of risks faced by the group and ensuring effective risk management and internal control systems [100]. Shareholder Engagement - The company is committed to regular communication with shareholders through various channels, including interim and annual reports, and investor meetings [113]. - The company encourages shareholder proposals at annual or special meetings, requiring proper notice to be submitted within specified timeframes [112]. - The board believes that effective investor relations play a crucial role in creating shareholder value, enhancing company transparency, and building market confidence [114]. Future Outlook and Growth Initiatives - The company provided a positive outlook for the upcoming fiscal year, projecting a revenue growth of 12% to 15% [128]. - New product development initiatives are underway, with an investment of 5 million allocated for research and development in innovative water management technologies [128]. - The company plans to expand its market presence by entering three new regional markets by the end of 2023 [128]. - A strategic acquisition is in progress, targeting a company with an estimated value of 20 million, expected to enhance operational capabilities [128]. - The management team emphasized the importance of sustainability, aiming for a 25% reduction in carbon emissions by 2025 [128].

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Summary of Key Financial Results](index=1&type=section&id=Summary%20of%20Key%20Financial%20Results) Profit attributable to equity holders decreased to HKD 1,374.2 million, mainly due to a deemed disposal loss and halted water environment projects, yet core water treatment profit grew 13% with stable cash flow | Indicator | 2022 (HKD Million) | Reason for Change | | :--- | :--- | :--- | | Profit attributable to equity holders of the Company | 1,374.2 | Decrease, mainly due to a deemed disposal loss of HKD 1,091 million from associate Shandong Hi-Speed New Energy Group Limited (one-off, non-cash) and cessation of investment in integrated water environment treatment projects | | Core water treatment business profit growth | 13% | Steady growth | | Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) | 8,297 | - | | Proposed final dividend per share | 8.7 HK Cents | - | | Full-year dividend per share | 15.7 HK Cents | - | - The Board firmly believes that with the rapid recovery of the Chinese economy, the Group's operational level will further improve and develop from the 2023 financial year onwards[2](index=2&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Income Statement](index=2&type=section&id=Consolidated%20Income%20Statement) Operating revenue decreased by 10.4% to HKD 24,982 million, with profit for the year down 50.3% to HKD 2,715.7 million, primarily due to increased net other operating expenses and reduced share of joint venture profits | Indicator | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Operating revenue | 24,982,372 | 27,880,147 | -10.4% | | Gross profit | 9,838,002 | 10,449,670 | -5.8% | | Operating profit | 6,215,907 | 8,731,109 | -28.8% | | Finance costs | (3,192,649) | (2,718,745) | +17.4% | | Profit before tax | 3,797,043 | 6,932,145 | -45.2% | | Profit for the year | 2,715,710 | 5,467,921 | -50.3% | | Profit attributable to equity holders of the Company | 1,374,151 | 4,195,940 | -67.2% | | Basic earnings per share | 13.18 HK Cents | 41.42 HK Cents | -68.2% | | Diluted earnings per share | 13.16 HK Cents | 41.17 HK Cents | -68.0% | [Consolidated Statement of Comprehensive Income](index=3&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) The Group recorded a total comprehensive loss of HKD 4,159.8 million, a significant shift from prior year's income, mainly due to foreign exchange translation losses and fair value changes in equity investments | Indicator | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Profit for the year | 2,715,710 | 5,467,921 | -50.3% | | Other comprehensive income/(loss) | (6,875,545) | 1,275,498 | Significant decrease | | - Translation of foreign operations | (6,447,064) | 1,386,186 | Shift from income to loss | | - Fair value changes of equity investments | (415,213) | (116,039) | Loss widened | | Total comprehensive income/(loss) for the year | (4,159,835) | 6,743,419 | Shift from income to loss | | Total comprehensive income/(loss) attributable to equity holders of the Company | (4,006,389) | 5,165,135 | Shift from income to loss | [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) Total assets slightly increased to HKD 183,945.7 million, with non-current asset shifts, while total equity decreased by 6.4% and total liabilities rose by 3.7%, increasing the gearing ratio | Indicator | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Total assets | 183,945,711 | 183,623,186 | +0.2% | | Non-current assets | 137,359,876 | 144,021,885 | -4.6% | | - Amounts due from contract customers | 22,700,825 | 36,255,486 | -37.4% | | - Receivables from service concession arrangements | 58,470,512 | 53,218,131 | +9.9% | | Current assets | 46,585,835 | 39,601,301 | +17.6% | | Total equity | 59,463,501 | 63,548,754 | -6.4% | | Total liabilities | 124,482,210 | 120,074,432 | +3.7% | | - Non-current liabilities | 73,741,052 | 70,374,829 | +4.8% | | - Current liabilities | 50,741,158 | 49,699,603 | +2.1% | [Notes to the Financial Statements](index=6&type=section&id=Notes%20to%20the%20Financial%20Statements) [Basis of Presentation and Preparation](index=6&type=section&id=Basis%20of%20Presentation%20and%20Preparation) The Group's financial statements are prepared on a going concern basis, adhering to HKFRS and Hong Kong Companies Ordinance, with control assessed based on power over and exposure to variable returns from investees - As of December 31, 2022, the Group had net current liabilities of **HKD 4.2 billion**, but the Board believes the Group will have sufficient available funds to operate on a going concern basis, considering existing bank facilities, timing of capital commitments, and potential equity financing[9](index=9&type=chunk) - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and disclosure requirements of the Hong Kong Companies Ordinance, presented in Hong Kong Dollars under the historical cost convention, except for certain financial assets[10](index=10&type=chunk) - Consolidated financial statements include the Company and its subsidiaries, with control obtained based on exposure or rights to variable returns from involvement with the investee and the ability to affect those returns through power over the investee[11](index=11&type=chunk) [Changes in Accounting Policies and Disclosures](index=8&type=section&id=Changes%20in%20Accounting%20Policies%20and%20Disclosures) Revised HKFRS, including HKFRS 3, HKAS 16, HKAS 37, and Annual Improvements 2018-2020, were adopted this year, with no significant impact on the Group's financial position or performance - HKFRS 3 amendments replaced conceptual framework references and added exceptions to recognition principles, with no impact on the Group's financial position and performance[12](index=12&type=chunk) - HKAS 16 amendments prohibit deducting proceeds from property, plant, and equipment sales from cost during the period to achieve intended operational status, with no impact on the Group's financial position or performance[12](index=12&type=chunk) - HKAS 37 amendments clarified the composition of costs to fulfill an onerous contract, with no impact on the Group's financial position or performance[13](index=13&type=chunk) - HKFRS 9 amendments clarified fees included when assessing whether terms of a financial liability are substantially different, with no impact on the Group's financial position or performance[13](index=13&type=chunk) [Operating Segment Information](index=9&type=section&id=Operating%20Segment%20Information) The Group's operations include water treatment, construction, technology services, equipment sales, and urban resource services, with Mainland China as the primary market, though water treatment and construction revenue declined in 2022 - The Group's operating segments include wastewater and reclaimed water treatment and construction services, water supply services, technology and consulting services and equipment sales, and urban resource services[14](index=14&type=chunk) | Segment | 2022 Operating Revenue (HKD Thousand) | 2021 Operating Revenue (HKD Thousand) | 2022 Gross Profit (HKD Thousand) | 2021 Gross Profit (HKD Thousand) | | :--- | :--- | :--- | :--- | :--- | | Wastewater and reclaimed water treatment and construction services | 15,958,680 | 20,749,712 | 6,548,462 | 7,067,372 | | Water supply services | 3,089,815 | 3,069,094 | 1,399,709 | 1,404,760 | | Technology and consulting services and equipment sales | 3,393,251 | 4,061,341 | 1,372,851 | 1,977,538 | | Urban resource services | 2,540,626 | – | 516,980 | – | | Total | 24,982,372 | 27,880,147 | 9,838,002 | 10,449,670 | | Region | 2022 Operating Revenue (HKD Thousand) | 2021 Operating Revenue (HKD Thousand) | | :--- | :--- | :--- | | Mainland China | 23,436,091 | 26,265,120 | | Other regions | 1,546,281 | 1,615,027 | | Total | 24,982,372 | 27,880,147 | [Operating Revenue](index=12&type=section&id=Operating%20Revenue) Total operating revenue for 2022 was HKD 24,982.4 million, a 10.4% decrease, with significant declines in wastewater and reclaimed water treatment services, offset partly by new urban resource services | Operating Revenue Source | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Operating revenue from contracts with customers | 9,873,665 | 8,145,080 | +21.2% | | Wastewater and reclaimed water treatment services | 6,085,015 | 12,604,632 | -51.7% | | Water supply services | 3,089,815 | 3,069,094 | +0.7% | | Technology and consulting services and equipment sales | 3,393,251 | 4,061,341 | -16.5% | | Urban resource services | 2,540,626 | – | New | | Total | 24,982,372 | 27,880,147 | -10.4% | - Estimated interest income from service concession arrangements was **HKD 3,531,519,000** (2021: HKD 3,390,411,000), included in operating revenue[18](index=18&type=chunk) [Operating Profit](index=13&type=section&id=Operating%20Profit) Operating profit for 2022 decreased by 28.8% to HKD 6,215.9 million, primarily due to a substantial reduction in construction service costs and increased depreciation of property, plant, and equipment and right-of-use assets | Cost Item | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Cost of providing wastewater and reclaimed water treatment services | 4,084,868 | 3,265,409 | +25.1% | | Cost of construction services | 4,968,465 | 10,079,786 | -50.7% | | Cost of water supply services | 1,544,994 | 1,536,417 | +0.6% | | Cost of providing technology and consulting services and equipment sales | 2,020,400 | 2,083,803 | -3.1% | | Cost of providing urban resource services | 2,023,646 | – | New | | Depreciation of property, plant and equipment | 669,370 | 334,231 | +100.3% | | Depreciation of right-of-use assets | 77,528 | 44,990 | +72.3% | | Amortisation of concession rights | 501,997 | 465,062 | +7.9% | | Amortisation of other intangible assets | 58,446 | 50,805 | +15.0% | [Finance Costs](index=13&type=section&id=Finance%20Costs) Total finance costs increased by 17.4% to HKD 3,192.6 million in 2022, driven by higher interest on bank and other borrowings, despite a slight decrease in corporate bond and bills payable interest | Finance Cost Item | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Interest on bank and other borrowings | 2,377,196 | 1,911,963 | +24.3% | | Interest on corporate bonds | 771,177 | 805,205 | -4.2% | | Interest on bills payable | 125,023 | 147,787 | -15.4% | | Interest on lease liabilities | 11,685 | 6,426 | +81.8% | | Total interest expenses | 3,285,081 | 2,871,381 | +14.4% | | Increase in discounted amount of major overhaul provision due to passage of time | 39,747 | 33,270 | +19.5% | | Total finance costs | 3,324,828 | 2,904,651 | +14.5% | | Less: Interest capitalised into construction service costs | (132,179) | (185,906) | -29.0% | | Total finance costs | 3,192,649 | 2,718,745 | +17.4% | [Income Tax Expense](index=14&type=section&id=Income%20Tax%20Expense) Total income tax expense for 2022 decreased by 26.2% to HKD 1,081.3 million, with current income tax provision in Mainland China being the main component, benefiting from tax incentives for certain subsidiaries - Hong Kong profits tax provision is made at a rate of **16.5%** on estimated assessable profits generated in Hong Kong[21](index=21&type=chunk) - Certain subsidiaries in Mainland China enjoy income tax exemptions and reductions, benefiting from a preferential corporate income tax rate of **15%** due to their engagement in environmental protection, energy, and water conservancy businesses or location in western Mainland China[21](index=21&type=chunk) | Income Tax Item | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Current – Hong Kong | 8,656 | 8,636 | +0.2% | | Current – Mainland China | 739,822 | 776,500 | -4.7% | | Current – Other regions | 35,582 | 31,674 | +12.3% | | Deferred | 297,273 | 647,372 | -54.1% | | Total tax expense for the year | 1,081,333 | 1,464,224 | -26.2% | [Dividends](index=14&type=section&id=Dividends) The Group proposed a final dividend of 8.7 HK cents per share for 2022, an increase from 6.7 HK cents in 2021, with the total annual dividend remaining largely stable at HKD 1,582.8 million | Dividend Type | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Interim dividend (HK Cents per share) | 7.0 | 9.0 | -22.2% | | Proposed final dividend (HK Cents per share) | 8.7 | 6.7 | +29.9% | | Total | 1,582,761 | 1,588,082 | -0.3% | - The proposed final dividend for the year is subject to approval by the Company's shareholders at the forthcoming annual general meeting[23](index=23&type=chunk) [Earnings Per Share](index=15&type=section&id=Earnings%20Per%20Share) Basic earnings per share for 2022 significantly decreased to 13.18 HK cents from 41.42 HK cents, primarily due to reduced profit attributable to equity holders and adjustments for perpetual capital instruments | Indicator | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Profit for the year attributable to equity holders of the Company | 1,374,151 | 4,195,940 | -67.2% | | Distributions on perpetual capital instruments | (45,428) | (48,563) | -6.5% | | Profit used for calculating basic earnings per share | 1,328,723 | 4,147,377 | -68.0% | | Profit for the year attributable to equity holders of the Company used for calculating diluted earnings per share | 1,327,861 | 4,147,377 | -68.0% | | Number of Ordinary Shares | 2022 | 2021 | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Weighted average number of ordinary shares in issue during the year less weighted average number of shares held under share award scheme for calculating basic earnings per share | 10,082,181,556 | 10,012,507,269 | +0.7% | | Weighted average number of ordinary shares for calculating diluted earnings per share | 10,089,632,605 | 10,073,275,600 | +0.2% | [Receivables](index=16&type=section&id=Receivables) Receivables from service concession arrangements and trade receivables increased in 2022, while prepayments, deposits, and other receivables decreased, with strict credit control maintained | Receivable Type | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Receivables from service concession arrangements (Total) | 65,373,265 | 58,740,854 | +11.3% | | - Non-current portion | 58,470,512 | 53,218,131 | +9.9% | | - Current portion | 6,902,753 | 5,522,723 | +25.0% | | Trade receivables (Total) | 24,749,386 | 20,846,959 | +18.7% | | - Non-current portion | 12,848,693 | 11,956,063 | +7.5% | | - Current portion | 11,900,693 | 8,890,896 | +33.8% | | Prepayments, deposits and other receivables (Total) | 10,848,331 | 12,066,168 | -10.1% | | - Non-current portion | 1,574,914 | 2,138,861 | -26.4% | | - Current portion | 9,273,417 | 9,927,307 | -6.6% | - The non-current portion of receivables from service concession arrangements is classified as contract assets due to conditions for receiving consideration not yet being met[28](index=28&type=chunk) - Trade receivables primarily arise from integrated treatment project construction services, water supply services, technology and consulting services, urban resource services, and equipment sales, with credit terms generally one to three months, and some integrated treatment project trade receivables bearing interest at **4.8% to 15.0%** per annum[29](index=29&type=chunk) [Payables](index=18&type=section&id=Payables) Other payables and accrued liabilities increased by 8.9% to HKD 11,345.8 million, while trade payables decreased by 9.7% to HKD 22,638.1 million, mainly due to a reduction in short-term trade payables | Payable Type | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Other payables and accrued liabilities (Total) | 11,345,842 | 10,418,464 | +8.9% | | - Accrued liabilities | 1,352,584 | 1,277,134 | +5.9% | | - Other liabilities | 5,138,846 | 4,357,137 | +18.0% | | Trade payables (Total) | 22,638,089 | 25,071,178 | -9.7% | | - Within three months | 9,413,357 | 13,540,292 | -30.5% | | - One to two years | 5,412,642 | 3,933,816 | +37.6% | - Trade payables are non-interest bearing, except for certain trade payables related to construction services that are not yet due for payment, and are generally settled within **60 days**[33](index=33&type=chunk) [Other Financial Information](index=19&type=section&id=Other%20Financial%20Information) As of December 31, 2022, net current liabilities significantly decreased by 58.8% to HKD 4,155.3 million, while total assets less current liabilities slightly declined | Indicator | 2022 (HKD Thousand) | 2021 (HKD Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Net current liabilities | 4,155,323 | 10,098,302 | -58.8% | | Total assets less current liabilities | 133,204,553 | 133,923,583 | -0.5% | [Management Discussion and Analysis](index=20&type=section&id=Management%20Discussion%20and%20Analysis) [Financial Summary](index=20&type=section&id=Financial%20Summary) In 2022, operating revenue decreased by 10% to HKD 24,982.4 million, mainly due to reduced water environment treatment construction services, with profit attributable to equity holders down 67% to HKD 1,374.2 million | Business Segment | 2022 Operating Revenue (HKD Million) | 2021 Operating Revenue (HKD Million) | Operating Revenue Change (%) | | :--- | :--- | :--- | :--- | | Wastewater and reclaimed water treatment services | 9,873.7 | 8,145.1 | +21% | | Water supply services | 3,089.8 | 3,069.1 | +1% | | Subtotal Water Treatment Services | 12,963.5 | 11,214.2 | +16% | | Integrated treatment project construction services | 1,458.9 | 3,071.4 | -53% | | Construction of BOT water projects | 4,626.1 | 9,533.2 | -51% | | Subtotal Water Environment Treatment Construction Services | 6,085.0 | 12,604.6 | -52% | | Water environment treatment technology services and equipment sales | 3,393.3 | 4,061.3 | -16% | | Urban resource services | 2,540.6 | – | New | | Total Business Performance | 24,982.4 | 27,880.1 | -10% | | Total Profit attributable to equity holders of the Company | 1,374.2 | 4,195.9 | -67% | - Other items, including headquarters expenses, deemed disposal loss from an associate, and finance costs, had a negative impact on profit attributable to equity holders of the Company, widening to **HKD -6,017.9 million** in 2022 from HKD -4,125.6 million in 2021[37](index=37&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk) [Business Review](index=25&type=section&id=Business%20Review) The Group's core businesses include water treatment, water environment construction, and technology services, with water treatment capacity increasing, while construction revenue declined and urban resource services became a new revenue contributor - The Group's water plants cover **20 provinces, 5 autonomous regions, and 4 municipalities** in Mainland China[46](index=46&type=chunk) - In 2022, the Group's total design capacity for water treatment services increased by **2,836,078 tons/day**, reaching **44,287,093 tons/day**[46](index=46&type=chunk) [Water Treatment Services](index=25&type=section&id=Water%20Treatment%20Services) The Group's water treatment services, including wastewater, reclaimed water, and water supply, saw increased design capacity and average contract prices in Mainland China, with stable overseas operations | Project Type | Operating Design Capacity (tons/day) | Design Capacity Not Yet Operational/Transferred (tons/day) | Total Design Capacity (tons/day) | | :--- | :--- | :--- | :--- | | Mainland China Wastewater Treatment | 18,517,545 | 5,852,450 | 24,369,995 | | Mainland China Reclaimed Water Treatment | 2,193,488 | 2,237,600 | 4,431,088 | | Mainland China Water Supply | 9,708,442 | 3,912,500 | 13,620,942 | | Overseas Wastewater Treatment | 230,518 | – | 230,518 | | Overseas Reclaimed Water Treatment | 267,350 | – | 267,350 | | Overseas Water Supply | 1,067,200 | – | 1,067,200 | | Overseas Seawater Desalination | 300,000 | – | 300,000 | | Total | 32,284,543 | 12,002,550 | 44,287,093 | - The total daily operating design capacity for Mainland China wastewater and reclaimed water treatment services was **18,517,545 tons** (a **9.9%** year-on-year increase), and for reclaimed water treatment plants was **2,193,488 tons** (a **29.8%** year-on-year increase), with an average daily treatment rate of **80%** and an actual average water treatment contract price of approximately **RMB 1.47 per ton** (a **5.8%** year-on-year increase)[49](index=49&type=chunk) - The total daily operating design capacity for Mainland China water supply services was **9,708,442 tons** (a **3.6%** year-on-year increase), with an actual average contract price of approximately **RMB 2.13 per ton** (a **1.4%** year-on-year increase)[57](index=57&type=chunk) [Water Environment Treatment Construction Services](index=31&type=section&id=Water%20Environment%20Treatment%20Construction%20Services) Operating revenue from integrated treatment project construction services significantly decreased by 53% to HKD 1,458.9 million, and profit attributable to equity holders decreased by 43% to HKD 685.9 million, due to halted investments and restricted project operations - Operating revenue from integrated treatment project construction services decreased by **53%** from HKD 3,071.4 million in 2021 to **HKD 1,458.9 million** in 2022[59](index=59&type=chunk) - Interest income from water environment treatment projects attributable to the Company was **HKD 478.3 million** (2021: HKD 450.9 million), an increase of **6.1%**[59](index=59&type=chunk) - Total operating revenue from construction of BOT water projects was **HKD 4,626.1 million** (2021: HKD 9,533.2 million), a **51.4%** decrease; profit attributable to equity holders of the Company was **HKD 617.3 million** (2021: HKD 1,191.8 million), a **48.2%** decrease[60](index=60&type=chunk) [Water Environment Treatment Technology Services and Equipment Sales](index=32&type=section&id=Water%20Environment%20Treatment%20Technology%20Services%20and%20Equipment%20Sales) Operating revenue from water environment treatment technology services and equipment sales decreased by 16.5% to HKD 3,393.3 million, with profit attributable to equity holders down 43.2% to HKD 653.7 million, mainly due to China's travel restrictions - Operating revenue from providing technology services and equipment sales was **HKD 3,393.3 million** (2021: HKD 4,061.3 million), accounting for **14%** of the Group's total operating revenue[62](index=62&type=chunk) - Profit attributable to equity holders of the Company was **HKD 653.7 million** (2021: HKD 1,151.4 million)[62](index=62&type=chunk) - The decrease in operating revenue and profit attributable to equity holders of the Company was mainly due to travel restrictions implemented in China during the year, hindering the development of new technology service projects[62](index=62&type=chunk) [Urban Resource Services](index=33&type=section&id=Urban%20Resource%20Services) Effective June 30, 2022, the Group consolidated Beijing Enterprises Urban Resources Group Limited, which contributed HKD 2,540.6 million in operating revenue and HKD 48.1 million in net profit attributable to the Group - Effective June 30, 2022, the Group consolidated the results of Beijing Enterprises Urban Resources Group Limited ("BEUR")[63](index=63&type=chunk) - BEUR primarily engages in environmental sanitation services, hazardous waste treatment, and waste electrical and electronic product processing businesses[63](index=63&type=chunk) - From the consolidation date to December 31, 2022, BEUR contributed **HKD 2,540.6 million** in operating revenue, with the Group's share of net profit being **HKD 48.1 million**[63](index=63&type=chunk) [Financial Analysis](index=33&type=section&id=Financial%20Analysis) Operating revenue decreased by 10% to HKD 24,982.4 million, gross profit margin rose to 39%, while management expenses and net other operating expenses increased, and the gearing ratio also rose [Revenue and Cost Analysis](index=33&type=section&id=Revenue%20and%20Cost%20Analysis) Operating revenue decreased by 10% to HKD 24,982.4 million, primarily due to reduced water environment treatment construction services, while cost of sales decreased by 13.1% and gross profit margin rose to 39% - Operating revenue for the year was **HKD 24,982.4 million** (2021: HKD 27,880.1 million), with the decrease mainly due to reduced operating revenue from water environment treatment construction services[64](index=64&type=chunk) - Cost of sales for the year was **HKD 15,144.4 million** (2021: HKD 17,430.5 million), with the decrease mainly due to a **HKD 5,111.3 million** reduction in construction service costs[65](index=65&type=chunk) - The gross profit margin for the year increased from **37%** last year to **39%**, due to a change in the operating revenue mix, with a higher proportion of operating revenue from water treatment services compared to water environment treatment construction services[66](index=66&type=chunk) [Other Income and Expenses](index=35&type=section&id=Other%20Income%20and%20Expenses) Net other income and gains increased to HKD 1,488.3 million, while administrative expenses rose to HKD 3,457.3 million, and net other operating expenses significantly increased to HKD 2,783.4 million, mainly due to a deemed disposal loss and remeasurement loss - Net other income and gains for the year was **HKD 1,488.3 million** (2021: HKD 1,248.5 million), mainly comprising sludge treatment revenue of **HKD 145.7 million**, pipeline installation revenue of **HKD 307.2 million**, bargain purchase gain from subsidiary acquisition of **HKD 186.5 million**, and government grants of **HKD 244.3 million**[68](index=68&type=chunk) - Administrative expenses for the year increased to **HKD 3,457.3 million** (2021: HKD 3,158.4 million), mainly due to increased staff-related expenses from business expansion and the consolidation of Beijing Enterprises Urban Resources during the year[69](index=69&type=chunk) - Net other operating expenses for the year increased from HKD 905.6 million in 2021 to **HKD 2,783.4 million**, mainly due to a deemed disposal loss of **HKD 1,091 million** from associate Shandong Hi-Speed New Energy Group Limited and a remeasurement loss of **HKD 173 million** from Beijing Enterprises Urban Resources[70](index=70&type=chunk) [Share of Profits](index=36&type=section&id=Share%20of%20Profits) Share of profits from joint ventures decreased by 24.3% to HKD 652.0 million, while share of profits from associates increased by 109.6% to HKD 121.8 million, mainly due to increased share from Shandong Hi-Speed New Energy Group Limited - Share of profits from joint ventures decreased to **HKD 652.0 million** (2021: HKD 861.7 million), mainly due to reduced profits from several joint ventures engaged in water treatment services and water environment treatment technology services and equipment sales[72](index=72&type=chunk) - Share of profits from associates increased to **HKD 121.8 million** (2021: HKD 58.1 million), mainly due to increased share of profits from Shandong Hi-Speed New Energy Group Limited[73](index=73&type=chunk) [Tax and Perpetual Capital Instruments](index=37&type=section&id=Tax%20and%20Perpetual%20Capital%20Instruments) Income tax expense included HKD 739.8 million in current Mainland China income tax, with an effective tax rate of approximately 18% due to tax incentives, and perpetual capital instrument distributions related to 2021 bond coupon payments - Income tax expense for the year included current Mainland China income tax of **HKD 739.8 million** Due to tax incentives for some subsidiaries, the effective tax rate for Mainland China operations was approximately **18%**, lower than the standard Mainland China corporate income tax rate of **25%**[74](index=74&type=chunk) - Profit attributable to holders of perpetual capital instruments refers to coupon payments on perpetual bonds with a total principal amount of **RMB 2.5 billion** issued in 2021[75](index=75&type=chunk) [Asset Changes](index=37&type=section&id=Asset%20Changes) Property, plant, and equipment increased by HKD 3,754.9 million, and right-of-use assets by HKD 385.7 million, mainly due to the consolidation of Beijing Enterprises Urban Resources, while investments in joint ventures and associates decreased - Property, plant and equipment increased by **HKD 3,754.9 million**, mainly due to the consolidation of Beijing Enterprises Urban Resources during the year[75](index=75&type=chunk) - Right-of-use assets increased by **HKD 385.7 million**, mainly due to the consolidation of Beijing Enterprises Urban Resources during the year[76](index=76&type=chunk) - The balance of concession rights increased mainly due to the acquisition of a subsidiary and the consolidation of Beijing Enterprises Urban Resources[81](index=81&type=chunk) - Investments in joint ventures decreased by **HKD 351.2 million**, mainly due to RMB depreciation and dividends declared by certain joint ventures[82](index=82&type=chunk) - Investments in associates decreased by **HKD 2,753.2 million**, mainly due to RMB depreciation, the deemed disposal of Shandong Hi-Speed New Energy Group Limited, and the consolidation of Beijing Enterprises Urban Resources, which was previously classified as an associate[82](index=82&type=chunk) [Receivables and Payables](index=38&type=section&id=Receivables%20and%20Payables) Total amounts due from contract customers, receivables from service concession arrangements, and trade receivables slightly decreased to HKD 117,214.7 million, with shifts in composition due to reclassifications and acquisitions | Total Receivables | 2022 (HKD Million) | 2021 (HKD Million) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Amounts due from contract customers | 27,092.0 | 40,054.2 | -32.4% | | Receivables from service concession arrangements | 65,373.3 | 58,740.8 | +11.3% | | Trade receivables | 24,749.4 | 20,847.0 | +18.7% | | Total | 117,214.7 | 119,642.0 | -2.0% | - Amounts due from contract customers decreased by **HKD 12,962.2 million**, mainly due to reclassification to receivables from service concession arrangements and trade receivables upon commencement of operations for certain BOT projects and completion of BT projects, respectively[78](index=78&type=chunk) - Trade receivables increased by **HKD 3,902.4 million**, mainly due to the consolidation of Beijing Enterprises Urban Resources and reclassification from amounts due from contract customers upon completion of BT projects[79](index=79&type=chunk) - Other payables and accrued liabilities increased by **HKD 927.4 million**, mainly due to the consolidation of Beijing Enterprises Urban Resources[84](index=84&type=chunk) - Trade payables decreased by **HKD 2,433.1 million**, mainly due to reduced trade payables to subcontractors for water environment treatment project construction services during the year[89](index=89&type=chunk) [Capital Structure and Liquidity](index=40&type=section&id=Capital%20Structure%20and%20Liquidity) Cash and cash equivalents increased to HKD 13,163.9 million, total borrowings rose to HKD 82,095.3 million, and the gearing ratio increased to 1.16, primarily due to increased borrowings and reduced equity - Cash and cash equivalents increased by **HKD 2,421.2 million**, mainly due to the consolidation of Beijing Enterprises Urban Resources and proceeds from corporate bond issuance during the year[84](index=84&type=chunk) - Bank and other borrowings increased by **HKD 7,151.5 million**, mainly due to the consolidation of Beijing Enterprises Urban Resources and new bank loans to fund the acquisition and construction of multiple water projects in Mainland China during the year[87](index=87&type=chunk) - Corporate bonds increased by **HKD 1,269.0 million**, mainly due to the net effect of new corporate bonds with a principal amount of **RMB 2 billion** issued during the year and RMB depreciation[88](index=88&type=chunk) - The gearing ratio (total bank and other borrowings, finance lease payables, bills payable, and corporate bonds less cash and cash equivalents divided by total equity) as of December 31, 2022, was **1.16** (2021: 1.03), with the increase mainly due to increased bank and other borrowings and reduced total equity during the year[90](index=90&type=chunk) - Total capital expenditure for the year was **HKD 7,324.9 million** (2021: HKD 10,709.6 million), primarily for acquiring property, plant and equipment, right-of-use assets, and intangible assets; constructing and acquiring water plants; and equity investments[91](index=91&type=chunk) [Future Outlook](index=43&type=section&id=Future%20Outlook) The Group will prioritize sustainable development, integrate digital technology, enhance core competitiveness for asset-light transformation, advance smart water R&D, and lead carbon reduction in the water industry, aiming for high-quality, sustainable growth in 2023 - The Company integrates data elements and digital technology into its corporate development, building an enterprise data asset and management system, and establishing a comprehensive, continuous innovation mechanism to support its asset-light strategic transformation and sustainable development[92](index=92&type=chunk) - Guided by its digitalization strategy, the Group continuously advances the R&D and iterative upgrade of smart water products, and enhances its operational efficiency through systematic construction of business and management digitalization[92](index=92&type=chunk) - The Group actively responds to the national "3060" dual carbon strategy, adhering to the development philosophy of "green priority, carbon reduction and efficiency enhancement," continuously increasing R&D investment in low-carbon new technologies, optimizing low-carbon operational management methods, fully exploring its own emission reduction potential, and leading carbon reduction and low-carbon transformation in the water industry[93](index=93&type=chunk) - In 2023, the Group will continue to acquire and manage large-scale assets, create new business growth points through technological and model innovation, improve corporate operational efficiency, and focus on high-quality, sustainable development, striving towards its vision of "becoming a trusted, development-leading world-class water environment service provider"[94](index=94&type=chunk) [Other Corporate Information](index=45&type=section&id=Other%20Corporate%20Information) [Employees and Remuneration Policy](index=45&type=section&id=Employees%20and%20Remuneration%20Policy) As of December 31, 2022, the Group employed 71,974 staff, with total staff costs significantly increasing to HKD 5,428.7 million, and remuneration packages determined by market terms and individual performance - As of December 31, 2022, the Group employed **71,974 staff** (including **51,367 employees** from Beijing Enterprises Urban Resources)[95](index=95&type=chunk)[96](index=96&type=chunk) - Total staff costs for the year ended December 31, 2022, were **HKD 5,428,673,000** (2021: HKD 3,622,166,000), an increase of **49.9%**[95](index=95&type=chunk) - The Group's remuneration packages are generally determined by market terms and individual performance, including discretionary bonuses, share options, and share awards As of December 31, 2022, the total number of outstanding share options represented approximately **1.42%** of the Company's issued ordinary shares, and **21,664,326 award shares** were unvested, representing approximately **0.22%** of the issued ordinary shares[95](index=95&type=chunk) [Significant Investments and Acquisitions](index=45&type=section&id=Significant%20Investments%20and%20Acquisitions) For the year ended December 31, 2022, the Group made no significant investments in or acquisitions of subsidiaries and affiliated companies - For the year ended December 31, 2022, the Group had no significant investments in or acquisitions of subsidiaries and affiliated companies[95](index=95&type=chunk) [Pledge of Group Assets](index=45&type=section&id=Pledge%20of%20Group%20Assets) As of December 31, 2022, the Group's secured bank and other borrowings and corporate bonds were collateralized by various assets, including concession rights, land use rights, investment properties, and equity interests in subsidiaries - The Group's secured bank and other borrowings and corporate bonds are collateralized by concession rights (including concession rights and receivables from service concession arrangements), land use rights and buildings, investment properties, guarantees provided by the Company and/or its subsidiaries, property, plant and equipment, right-of-use assets, equity interests in subsidiaries, bank balances, and receivables[96](index=96&type=chunk)[97](index=97&type=chunk) [Foreign Exchange Risk](index=46&type=section&id=Foreign%20Exchange%20Risk) Most of the Company's subsidiaries operate in Mainland China, with transactions primarily in RMB, making the Group's consolidated accounts and net asset value susceptible to RMB to HKD exchange rate fluctuations, with no derivative hedging currently employed - Most of the Company's subsidiaries operate in Mainland China, and their transactions are mostly denominated and settled in RMB[98](index=98&type=chunk) - Exchange rate fluctuations will affect currency translation when the Group prepares its consolidated accounts, thereby impacting the Group's net asset value[98](index=98&type=chunk) - Currently, the Group does not use derivative financial instruments to hedge its foreign currency risk[98](index=98&type=chunk) [Contingent Liabilities](index=46&type=section&id=Contingent%20Liabilities) As of December 31, 2022, the Group provided HKD 2,281.6 million in bank guarantees for project bids and performance bonds, and HKD 2,593.9 million in corporate guarantees for associate and joint venture financing, with no material adverse financial impact from a recent arbitration | Guarantee Type | 2022 (HKD Thousand) | 2021 (HKD Thousand) | | :--- | :--- | :--- | | Bank guarantees (project bidding and performance bonds) | 2,281,620 | 1,223,872 | | Corporate guarantees (associate and joint venture financing) | 2,593,904 | 3,635,425 | - In September 2021, an arbitration proceeding was initiated against a direct wholly-owned subsidiary of the Company, and the final arbitration award has been issued, which did not have a material adverse financial impact on the Group[100](index=100&type=chunk) [Final Dividend](index=47&type=section&id=Final%20Dividend) The Board recommends a final dividend of 8.7 HK cents per ordinary share for the financial year ended December 31, 2022, payable to shareholders on June 16, 2023, subject to AGM approval on June 7, 2023 - The Board recommends a final dividend of **8.7 HK cents per ordinary share** for the financial year ended December 31, 2022[101](index=101&type=chunk) - The proposed final dividend will be paid to the Company's shareholders whose names appear on the Company's register of members on Friday, June 16, 2023, subject to approval by shareholders at the Annual General Meeting to be held on Wednesday, June 7, 2023[101](index=101&type=chunk) [Closure of Register of Members](index=47&type=section&id=Closure%20of%20Register%20of%20Members) The Company will suspend its register of members in two periods to determine eligibility for attending the AGM (June 2-7, 2023) and receiving the proposed final dividend (June 14-16, 2023) - The Company will suspend its register of members from Friday, June 2, 2023, to Wednesday, June 7, 2023, to determine eligibility for attending and voting at the Annual General Meeting[102](index=102&type=chunk) - The Company will suspend its register of members from Wednesday, June 14, 2023, to Friday, June 16, 2023, to determine eligibility for receiving the proposed final dividend[103](index=103&type=chunk) [Corporate Governance](index=48&type=section&id=Corporate%20Governance) For the year ended December 31, 2022, the Company complied with all Corporate Governance Code provisions, except for the Chairman's AGM absence and a temporary shortfall in independent non-executive directors, which was rectified - For the year ended December 31, 2022, the Company complied with all code provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules, except for the absence of the Chairman of the Board at the Annual General Meeting[104](index=104&type=chunk) - Following the resignation of Mr Wang Kaijun, an independent non-executive Director of the Company, on August 31, 2022, the number of independent non-executive Directors of the Company fell below the requirement of Rule 3.10A of the Listing Rules, but was rectified within three months[104](index=104&type=chunk) [Standard Code for Securities Transactions by Directors](index=49&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company adopted the Standard Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance for the year ended December 31, 2022 - The Company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules as its code of conduct for directors' securities transactions[105](index=105&type=chunk) - For the year ended December 31, 2022, the Company confirmed that all Directors complied with the required standards set out in the Standard Code and its code of conduct for directors' securities transactions[105](index=105&type=chunk) [Audit Committee](index=49&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, reviewed and approved the 2022 final results, confirming appropriate accounting policies and sufficient disclosures - The Company's Audit Committee, comprising three independent non-executive Directors, is primarily responsible for reviewing and overseeing the Company's financial reporting process, risk management, and internal controls[106](index=106&type=chunk) - The final results for the year ended December 31, 2022, have been reviewed and approved by the Audit Committee The Audit Committee is of the opinion that appropriate accounting policies have been adopted and sufficient disclosures have been made in the preparation of these results[106](index=106&type=chunk) [Scope of Work of the Company's Auditor on Preliminary Announcement](index=49&type=section&id=Scope%20of%20Work%20of%20the%20Company%27s%20Auditor%20on%20Preliminary%20Announcement) The Company's auditor confirmed the preliminary announcement's financial figures align with the draft consolidated financial statements but did not provide an opinion or assurance conclusion as their work is not an assurance engagement - The Company's auditor agreed that the figures in the consolidated statement of financial position, consolidated income statement, consolidated statement of comprehensive income, and related notes for the Group for the year ended December 31, 2022, as presented in the preliminary announcement, are consistent with the amounts in the Group's draft consolidated financial statements for the year[107](index=107&type=chunk) - The work performed by the Company's auditor in this regard does not constitute an assurance engagement, and accordingly, the Company's auditor does not express an opinion or an assurance conclusion on the preliminary announcement[107](index=107&type=chunk) [Purchase, Sale and Redemption of the Company's Listed Securities](index=50&type=section&id=Purchase%2C%20Sale%20and%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) For the year ended December 31, 2022, the Company repurchased 89,212,000 ordinary shares on the Stock Exchange for HKD 162,924,260, which were subsequently cancelled to enhance net asset value and shareholder value - For the year ended December 31, 2022, the Company repurchased a total of **89,212,000 ordinary shares** of the Company on the Stock Exchange for a total consideration of **HKD 162,924,260** (before expenses)[108](index=108&type=chunk) - The Company subsequently cancelled all repurchased shares The share repurchases are expected to have a positive effect on the net asset value per share and create greater value for shareholders[108](index=108&type=chunk) | Year/Month | Number of Ordinary Shares Repurchased | Highest Price Per Share (HKD) | Lowest Price Per Share (HKD) | Total Consideration Paid (HKD) | | :--- | :--- | :--- | :--- | :--- | | August 2022 | 722,000 | 2.02 | 2.00 | 1,450,000 | | September 2022 | 32,534,000 | 2.02 | 1.63 | 59,819,320 | | October 2022 | 50,098,000 | 1.93 | 1.66 | 91,130,280 | | November 2022 | 5,838,000 | 1.93 | 1.67 | 10,485,460 | | December 2022 | 20,000 | 1.96 | 1.96 | 39,200 | | Total | 89,212,000 | | | 162,924,260 | [Proposed Amendments to the Articles of Association](index=51&type=section&id=Proposed%20Amendments%20to%20the%20Articles%20of%20Association) The Board proposes amendments to the Articles of Association to align with Listing Rules, enhance flexibility for hybrid and electronic general meetings, and reflect legal updates, subject to shareholder approval at the AGM - The Board proposes certain amendments to the Company's existing Articles of Association to align them with the core shareholder protection levels set out in Appendix 3 of the Listing Rules and to allow the Company flexibility to convene and hold hybrid and electronic general meetings[110](index=110&type=chunk) - The proposed amendments are subject to approval by the Company's shareholders by way of a special resolution at the Annual General Meeting and will become effective upon such approval by the Company's shareholders at the Annual General Meeting[110](index=110&type=chunk) [Publication of Final Results and Annual Report](index=51&type=section&id=Publication%20of%20Final%20Results%20and%20Annual%20Report) This results announcement is published on the Company's and Stock Exchange's websites, with the 2022 Annual Report and AGM Notice to be dispatched to shareholders and published online in due course - This results announcement is published on the Company's website (www.bewg.net) and the Stock Exchange's website (www.hkexnews.hk)[111](index=111&type=chunk) - The 2022 Annual Report and the Notice of Annual General Meeting will be dispatched to the Company's shareholders and published on the Company's and the Stock Exchange's websites in due course[111](index=111&type=chunk) [Acknowledgement](index=52&type=section&id=Acknowledgement) Chairman Xiong Bin, on behalf of the Board, extends sincere gratitude to all Group employees for their continuous support, dedication, and loyal service - Chairman Xiong Bin, on behalf of the Board, extends sincere gratitude to all Group employees for their continuous support, dedication, and loyal service[112](index=112&type=chunk)

Financial Performance - For the six months ended June 30, 2022, the company achieved operating revenue of HKD 10,645,900,000, a decrease of 22% year-on-year[13]. - The net profit attributable to shareholders for the same period was HKD 694,000,000, representing a 71% decrease compared to the previous year[13]. - The company's profit attributable to shareholders decreased by 71% to HKD 694 million, primarily due to a 22% decline in revenue from water environment governance projects, totaling HKD 10,645.9 million[23]. - The company reported a total revenue of HKD 10,645.9 million, with a gross profit of HKD 3,808.7 million, resulting in a gross margin of approximately 36%[25]. - The company reported a total revenue of 4,105,500,000 HKD for the six months ended June 30, 2022, compared to 4,887,425,000 HKD for the same period in the previous year, representing a decrease of approximately 15.9%[96]. - The net loss attributable to shareholders for the period was 1,232,569,000 HKD, compared to a net profit of 670,580,000 HKD in the prior year, indicating a significant decline in profitability[96]. - The company’s total liabilities increased to 22,996,420,000 HKD as of June 30, 2022, compared to 21,868,213,000 HKD at the end of the previous year, indicating a rise of about 5.1%[96]. Dividends and Earnings - The company declared an interim cash dividend of HKD 0.07 per share to reward shareholders for their continued support[13]. - Basic earnings per share decreased to HKD 6.64 from HKD 24.01, while diluted earnings per share fell to HKD 6.61 from HKD 23.83[86]. - The interim cash dividend declared was HKD 0.07 per share, totaling approximately HKD 709,508,000, compared to HKD 0.09 per share and HKD 908,982,000 in the previous year[148]. Revenue Breakdown - Revenue from wastewater and reclaimed water treatment services in China was HKD 4,704 million, contributing 44% to total revenue, with a gross margin of 60%[24]. - The construction of integrated governance projects generated revenue of HKD 819.3 million, accounting for 8% of total revenue, with a gross margin of 17%[25]. - The revenue from water environment governance technology services and equipment sales was HKD 1,089.8 million, with a gross margin of 40%[27]. - Revenue from integrated governance project construction services decreased from HKD 1,494,900,000 to HKD 819,300,000, a drop of HKD 675,600,000[54]. Capacity and Projects - The total design capacity increased by 496,516 tons per day, bringing the total design capacity to 45,382,478 tons per day[13]. - New signed water treatment projects during the period included a wastewater treatment project in Baise City with a new signed water volume of 1,467,480 tons per day[13]. - The total design capacity of wastewater treatment facilities in mainland China is 17,997,460 tons per day, an increase from 16,831,055 tons per day last year, representing a growth of approximately 7%[41]. - The total designed capacity of new projects during the period was 1,467,480 tons per day, including BOT projects with a capacity of 815,000 tons per day[36]. Operational Efficiency and Strategy - The company is focusing on digital strategies and has successfully launched the "BEAOA" technology, the first of its kind for large-scale engineering applications in China[18]. - The company is committed to enhancing operational efficiency and customer satisfaction by implementing a customer-centric organizational structure[15]. - The company is actively exploring new businesses such as sludge disposal and industrial water treatment, in line with the national "3060" dual carbon goals[20]. - The company aims to enhance its digital transformation and operational management capabilities to improve service quality and strengthen its brand image[20]. Financial Management - The company has improved cash flow management and successfully issued its first medium-term note of the year at a record low interest rate[18]. - The company reported a significant increase in user engagement metrics, with a notable rise in active users compared to the previous reporting period[97]. - The company is investing in new technologies to improve operational capabilities and customer experience, with a focus on sustainability initiatives[97]. Assets and Liabilities - The total assets as of June 30, 2022, amounted to HKD 190,076,907, an increase from HKD 183,623,186 at the end of 2021[94]. - The total liabilities increased to HKD 127,085,987 from HKD 120,074,432, reflecting a rise in both current and non-current liabilities[94]. - The total receivables from contract customers, service concession arrangements, and accounts receivable amounted to HKD 121.1 billion, an increase from HKD 119.6 billion at the end of the previous year[71]. Employee and Management - The total number of employees as of June 30, 2022, was 71,246, including 50,436 from the merged subsidiary[82]. - Total compensation paid to key management personnel amounted to HKD 13,220,000 for the six months ended June 30, 2022, a slight decrease from HKD 13,467,000 in the same period of 2021[198]. Strategic Acquisitions - The group completed the acquisition of 70% equity in a wastewater treatment company in China for a total cash consideration of HKD 333,048[173]. - The group is expanding its business through strategic acquisitions aimed at enhancing its operational capabilities in relevant sectors[173]. Market Outlook - The company plans to focus on market expansion and new product development to drive future growth[87]. - The company has set a performance guidance for the next quarter, aiming for a revenue growth of approximately 10% year-over-year[97].

Financial Performance - The company recorded a revenue of HKD 27,880,100,000 for the year, representing a year-on-year increase of 9.9%[9]. - The net profit attributable to shareholders was HKD 4,195,900,000, reflecting a slight increase of 0.3% compared to the previous year[9]. - The basic earnings per share for the year were HKD 0.4142[9]. - The company's revenue increased by 10% to HKD 27,880,100,000, driven by growth in water treatment services[16]. - The profit attributable to shareholders rose to HKD 4,195,900,000, reflecting a strong performance in the water treatment segment[16]. - The gross profit margin for water treatment services was reported at 40%, with a significant contribution from both domestic and overseas operations[17]. - The total operating income from wastewater and reclaimed water treatment services in China reached HKD 7,674.1 million, a 30% increase compared to the previous year[26]. - The gross profit margin for wastewater treatment services was reported at 58%, while the gross profit margin for water supply services was 48%[26]. - The company's total revenue for the year was HKD 11,214.2 million, with a net profit attributable to shareholders of HKD 4,778.2 million, reflecting a significant increase in operational performance[34]. - The company reported a significant increase in interest income, which rose to HKD 1,096,965 from HKD 697,401, a growth of 57.43%[173]. - The company's management expenses increased to HKD 3,158,430 from HKD 2,526,199, reflecting a rise of 24.94%[173]. - The total comprehensive income for the year was HKD 6,743,419, down from HKD 9,718,763 in 2020, showing a decrease of 30.49%[174]. Capacity and Operations - The company added a net design capacity of 2,761,226 tons/day, bringing the total design capacity to 44,885,962 tons/day[10]. - The new signed water volume for the year was 3,960,221 tons/day, indicating strong operational delivery capabilities[10]. - The company achieved an additional recycled water capacity of 761,000 tons/day, promoting ecological utilization of wastewater[10]. - The average daily treatment volume was 14,652,604 tons, with an average daily treatment rate of 83%[35]. - The group operates 1,370 water plants and sewage treatment facilities across 20 provinces, 5 autonomous regions, and 4 municipalities in mainland China[29]. - The company operates 121 water supply plants in mainland China with a total design capacity of 9,372,836 tons per day, processing 2,002,000,000 tons and achieving an average contract price of approximately RMB 2.10 per ton[42]. Business Development and Strategy - The company is actively exploring new business growth points in water supply, pipeline networks, and wastewater resource utilization[10]. - The company is expanding its clean energy business, focusing on solar power, wind power, and clean heating services[11]. - The company plans to expand its market presence and invest in new technologies to enhance service offerings[21]. - The group plans to expand into new business areas such as sludge management and urban water services, focusing on customer experience and satisfaction[14]. - The company aims to enhance operational efficiency and achieve sustainable development by leveraging technology and innovative business models[14]. - The company is committed to sustainability and environmental protection, aligning its business strategies with global ecological standards[97]. Financial Position and Investments - The company successfully issued various bonds at historically low interest rates, showcasing its strong financial position in the market[12]. - The company's total equity increased to HKD 63,548,800,000, up from HKD 57,124,000,000 in 2020, indicating a growth of approximately 11.3%[61]. - The debt-to-equity ratio rose to 1.03 from 1.01 in 2020, primarily due to increased bank borrowings[61]. - The group has significant receivables from service concession arrangements, accounts receivable, and other receivables totaling approximately HKD 128.2 billion, representing 69.8% of total assets as of December 31, 2021[166]. - The expected credit loss provision for these receivables amounted to approximately HKD 1.56 billion[166]. - The company has a financial risk management policy detailed in the financial statements, addressing potential risks and uncertainties faced by the group[106]. Corporate Governance - The company has established three committees under the Board of Directors: the Audit Committee, the Nomination Committee, and the Remuneration Committee, to enhance corporate governance practices[76]. - The Audit Committee is responsible for reviewing the company's financial statements and ensuring compliance with corporate governance codes and environmental, social, and governance reporting guidelines[78]. - The board of directors consists of 9 members, including 5 executive directors and 4 independent non-executive directors[64]. - The company has implemented a share award scheme, granting 12,471,409 shares on November 1, 2021, with 140,920 shares unvested as of December 31, 2021[62]. - The company has a structured process for shareholders to propose items at the annual general meeting, requiring a signed notice to be submitted at least 7 days before the meeting[90]. - The company has adhered to all corporate governance code provisions, except for the absence of the chairman at the annual general meeting due to travel restrictions related to COVID-19[91]. Risk Management - The company has established a risk management framework consisting of "three lines of defense" to identify, assess, and monitor risks[84]. - The audit committee reported no significant internal control deficiencies as of December 31, 2021, and believes the risk management system is effective and adequate[86]. - The company has implemented a whistleblowing policy to allow employees and partners to report misconduct confidentially[86]. - The group has adopted revised Hong Kong Financial Reporting Standards for the first time in the current financial year, including HKFRS 9 and HKAS 39[198]. Shareholder Engagement - The company maintained effective communication with shareholders through online meetings and social media, ensuring transparency during the COVID-19 pandemic[91]. - The board believes that effective investor relations play a crucial role in creating shareholder value and enhancing market confidence[91]. - The company allows shareholders to convene a special general meeting upon request if they hold at least 10% of the paid-up capital[89]. Future Outlook - Future outlook indicates a focus on expanding market share and enhancing operational efficiency through new technologies and products[97]. - The company is actively pursuing mergers and acquisitions to strengthen its market position and diversify its service offerings[98]. - The company aims to leverage its strong financial position to explore new business opportunities in emerging markets[97].

[Company and Financial Overview](index=4&type=section&id=Company%20and%20Financial%20Overview) This section provides fundamental company information and the Chairman's review of financial performance and strategic initiatives [Company Information](index=4&type=section&id=Company%20Information) This section provides fundamental company information, including board members, registered office, principal bankers, and auditor - The company's principal bankers include major banks in Hong Kong and mainland China, such as Agricultural Bank of China, Bank of China, and Bank of Communications, indicating diverse financing channels[9](index=9&type=chunk) - The company's auditor is Ernst & Young[9](index=9&type=chunk) [Chairman's Report](index=6&type=section&id=Chairman%27s%20Report) The Chairman's report reviews H1 2021 performance, emphasizing steady growth, improved cash flow, and optimized profit structure Summary of H1 2021 Performance | Metric | Value | | :--- | :--- | | Operating Revenue | HKD 13.669 billion (+10% YoY) | | Profit Attributable to Shareholders | HKD 2.421 billion (+7% YoY) | | Basic Earnings Per Share | HKD 0.2401 | | Interim Cash Dividend | HKD 0.09 per share | | Net New Designed Capacity | 1,306,595 tons/day | | Total Designed Capacity | 43,431,331 tons/day | - The Group's asset-light transformation strategy has yielded significant results, with notable improvements in cash flow and enhanced capital management, supported by optimized accounts receivable management and successful issuance of low-interest Panda MTNs[13](index=13&type=chunk)[17](index=17&type=chunk) - The Group continues to deepen cooperation with China Three Gorges Corporation under an asset-light model, participating in Yangtze River protection projects with a cumulative total investment of **RMB 28.1 billion**[15](index=15&type=chunk) - The company actively responds to the national '3060 Dual Carbon Goals', with its Luoyang Chandong Wastewater Treatment Plant selected as one of the first low-carbon urban wastewater treatment operation cases, demonstrating industry recognition for its low-carbon practices[18](index=18&type=chunk) [Management Discussion and Analysis](index=11&type=section&id=Management%20Discussion%20and%20Analysis) This section analyzes the Group's H1 2021 financial and operational performance, driven by water treatment services, with detailed reviews of revenue, costs, and balance sheet items [Financial Summary](index=11&type=section&id=1.%20Financial%20Summary) This section presents H1 2021 financial performance by business segment and region, highlighting water treatment services as the primary profit driver H1 2021 Financial Performance by Business Segment | Business Segment | Operating Revenue (HKD million) | % of Total Revenue | Profit Attributable to Shareholders (HKD million) | % of Total Profit | | :--- | :--- | :--- | :--- | :--- | | **Water Treatment Services** | **5,202.2** | **38%** | **2,328.1** | **58%** | | - Wastewater and Reclaimed Water | 3,739.3 | 27% | 1,811.7 | 45% | | - Water Supply Services | 1,462.9 | 11% | 516.4 | 13% | | **Water Environment Governance Construction Services** | **6,917.5** | **51%** | **1,229.4** | **31%** | | - Integrated Governance Projects | 1,494.9 | 11% | 494.7 | 12% | | - Construction of BOT Water Projects | 5,422.6 | 40% | 734.7 | 19% | | **Water Environment Governance Technical Services and Equipment Sales** | **1,549.5** | **11%** | **445.0** | **11%** | | **Total** | **13,669.2** | **100%** | **4,002.5 (Business Performance)** | **100%** | H1 2021 vs H1 2020 Performance Comparison | Metric | H1 2021 (HKD million) | H1 2020 (HKD million) | Growth Rate | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 13,669.2 | 12,453.8 | +10% | | Profit Attributable to Shareholders | 2,420.8 | 2,268.4 | +7% | [Business Review](index=17&type=section&id=2.%20Business%20Review) As of June 30, 2021, the Group operated 1,317 water plants and rural wastewater treatment facilities with a total designed capacity of 43,431,331 tons/day, covering various regions in mainland China and overseas - As of June 30, 2021, the Group owned 1,317 water plants and rural wastewater treatment facilities, with a total designed capacity of **43,431,331 tons/day**[34](index=34&type=chunk)[35](index=35&type=chunk) - During the period, the Group's total new project designed capacity was 2,055,200 tons/day, while exited projects had a designed capacity of 748,605 tons/day, resulting in a net increase of **1,306,595 tons/day**[34](index=34&type=chunk) [Water Treatment Services](index=17&type=section&id=2.1%20Water%20Treatment%20Services) Water treatment services, including wastewater, reclaimed water, and water supply, are the Group's core business and primary profit driver, with mainland China as the main market Performance of Operating Water Treatment Services Segment (H1 2021) | Service Type | Region | Number of Plants | Designed Capacity (tons/day) | Operating Revenue (HKD million) | Profit Attributable to Shareholders (HKD million) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Wastewater and Reclaimed Water** | **Mainland China** | 802 | 16,730,995 | 3,522.1 | 1,779.7 | | | **Overseas** | 52 | 496,708 | 217.2 | 32.0 | | **Water Supply Services** | **Mainland China** | 114 | 9,291,665 | 1,186.3 | 441.0 | | | **Overseas** | 37 | 1,373,864 | 276.6 | 75.4 | | **Total** | | **1,005** | **27,893,232** | **5,202.2** | **2,328.1** | - The average contract price for wastewater and reclaimed water treatment services in mainland China was approximately **RMB 1.36 per ton**, an increase from RMB 1.28 at the end of 2020[38](index=38&type=chunk) [Water Environment Governance Construction Services](index=22&type=section&id=2.2%20Water%20Environment%20Governance%20Construction%20Services) This segment includes integrated governance and BOT water project construction, with integrated project revenue declining due to conservative investment, while BOT project profit decreased due to lower gross margin - In line with the Group's asset-light strategy, the investment approach for integrated governance projects became more conservative, leading to a decrease in construction operating revenue from HKD 1.68 billion to **HKD 1.49 billion** during the period[46](index=46&type=chunk) - Profit attributable to shareholders from construction of BOT water projects decreased by **30% year-on-year**, primarily due to a decline in gross margin for new BOT water projects during the period[48](index=48&type=chunk) [Water Environment Governance Technical Services and Equipment Sales](index=23&type=section&id=2.3%20Water%20Environment%20Technical%20Services%20and%20Equipment%20Sales) As a comprehensive water system solutions provider, the Group's technical services and equipment sales business continued to grow, with revenue reaching HKD 1.55 billion Technical Services and Equipment Sales Performance | Metric | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Operating Revenue | HKD 1,549.5 million | HKD 1,280.0 million | | Profit Attributable to Shareholders | HKD 445.0 million | HKD 404.1 million | [Financial Analysis](index=24&type=section&id=3.%20Financial%20Analysis) This section analyzes the Group's financial position, noting a slight decrease in overall gross margin due to construction services, increased administrative expenses, and a lower gearing ratio - The Group's overall gross margin slightly decreased from **38%** in the prior period to **37%**, primarily due to a decline in gross margin for integrated governance project construction services from 27% to **18%** and for construction of BOT water projects from 25% to **19%**[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) Key Receivables Movement (June 30, 2021 vs December 31, 2020) | Item | June 30, 2021 (HKD million) | December 31, 2020 (HKD million) | | :--- | :--- | :--- | | Amounts due from contract customers | 48,795.4 | 45,405.9 | | Service concession arrangement receivables | 48,179.4 | 45,829.7 | | Trade receivables | 20,973.4 | 21,232.2 | | **Total** | **117,948.2** | **112,467.8** | - As of June 30, 2021, the Group's gearing ratio (net debt/total equity) was **0.98**, a decrease from 1.01 at the end of 2020, mainly due to an increase in total equity from capital injection into a subsidiary during the period[69](index=69&type=chunk) - Total capital expenditure during the period was **HKD 6.09 billion**, primarily for the construction and acquisition of water plants (**HKD 5.26 billion**)[70](index=70&type=chunk) [Condensed Consolidated Financial Statements](index=33&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the six months ended June 30, 2021, including the income statement, statement of comprehensive income, statement of financial position, statement of changes in equity, and cash flow statement [Condensed Consolidated Income Statement](index=33&type=section&id=Condensed%20Consolidated%20Income%20Statement) For the six months ended June 30, 2021, the Group reported operating revenue of HKD 13.67 billion, gross profit of HKD 5.04 billion, and profit for the period of HKD 3.09 billion H1 2021 Condensed Consolidated Income Statement Summary | Metric (HKD million) | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Operating Revenue | 13,669.2 | 12,453.8 | | Gross Profit | 5,042.6 | 4,775.1 | | Profit from Operations | 4,696.8 | 4,244.7 | | Profit Before Tax | 3,762.7 | 3,481.3 | | Profit for the Period | 3,086.4 | 2,771.7 | | Profit Attributable to Equity Holders of the Company | 2,420.8 | 2,268.4 | [Condensed Consolidated Statement of Financial Position](index=35&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2021, the Group's total assets were HKD 182.55 billion, total liabilities were HKD 120.60 billion, and total equity was HKD 61.95 billion, with non-current assets forming the largest portion June 30, 2021 Condensed Consolidated Statement of Financial Position Summary | Metric (HKD million) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **182,553.7** | **174,401.1** | | - Non-current Assets | 140,042.5 | 132,953.7 | | - Current Assets | 42,511.2 | 41,447.4 | | **Total Equity** | **61,949.5** | **57,124.0** | | - Equity Attributable to Owners of the Company | 38,850.9 | 37,343.8 | | **Total Liabilities** | **120,604.3** | **117,277.1** | | - Non-current Liabilities | 72,658.1 | 65,355.1 | | - Current Liabilities | 47,946.2 | 51,922.0 | [Condensed Consolidated Cash Flow Statement](index=39&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Statement) For the six months ended June 30, 2021, the Group's net cash used in operating activities was HKD 1.33 billion, net cash used in investing activities was HKD 1.13 billion, and net cash from financing activities was HKD 2.85 billion H1 2021 Condensed Consolidated Cash Flow Statement Summary | Metric (HKD million) | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | (1,329.9) | (4,201.7) | | Net cash used in investing activities | (1,125.4) | (1,151.0) | | Net cash from financing activities | 2,845.8 | 4,323.8 | | Net increase/(decrease) in cash and cash equivalents | 390.5 | (1,028.8) | | Cash and cash equivalents at end of period | 14,941.1 | 10,804.2 | [Notes to the Condensed Consolidated Financial Information](index=41&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Information) This section provides detailed notes to the interim financial statements, covering basis of preparation, accounting policy changes, segment information, revenue recognition, asset and liability composition, related party transactions, contingent liabilities, and capital commitments [Operating Segment Information](index=43&type=section&id=2.%20Operating%20Segment%20Information) This note details revenue, performance, and assets by business segment and geographical region, with mainland China being the Group's primary revenue source - By geographical region, operating revenue from mainland China was **HKD 12.96 billion**, accounting for **94.8%** of total revenue, with other regions contributing HKD 0.70 billion[101](index=101&type=chunk) [Trade Receivables](index=53&type=section&id=11.%20Trade%20Receivables) As of June 30, 2021, the Group's total trade receivables were HKD 20.97 billion, slightly lower than HKD 21.23 billion at the end of 2020, with the majority settled within three months - Trade receivables primarily arise from integrated governance project construction services, technical and consulting services, among others, with most non-interest bearing except for certain integrated governance project receivables[117](index=117&type=chunk) [Contingent Liabilities](index=56&type=section&id=16.%20Contingent%20Liabilities) As of June 30, 2021, the Group had contingent liabilities, mainly comprising bank guarantees for project bidding and performance, and corporate guarantees for credit facilities to associates, joint ventures, and third parties - The Group provided bank guarantees of **HKD 925 million** for project bidding and performance, and corporate guarantees of **HKD 3.817 billion** for associated companies and third parties[126](index=126&type=chunk) [Capital Commitments](index=57&type=section&id=18.%20Capital%20Commitments) As of June 30, 2021, the Group's total contracted but unprovided capital commitments were HKD 19.16 billion, primarily for new service concession arrangements and contributions to joint ventures Capital Commitments Summary | Item (HKD million) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Transfer-Operate-Transfer (TOT) | 320.5 | 681.8 | | Build-Operate-Transfer (BOT) | 7,448.2 | 9,044.5 | | Contributions to joint ventures | 11,376.3 | 11,306.1 | | **Total** | **19,158.4** | **21,070.9** | [Related Party Disclosures](index=58&type=section&id=19.%20Related%20Party%20Disclosures) This note discloses significant related party transactions and balances, including deposits, loans, finance leases, guarantees, and service transactions with Beijing Enterprises Holdings and its subsidiaries, joint ventures, associates, and ABC Group - The Group maintains ongoing deposit and loan relationships with Beijing Enterprises Group Finance Co Ltd As of June 30, 2021, deposits with the company amounted to **HKD 1.46 billion**, and borrowings from the company were **HKD 4.34 billion**[133](index=133&type=chunk)[134](index=134&type=chunk) - Following ABC Financial's capital injection into the Group's subsidiary BEWG Guangxi, ABC Group became a related party, engaging in deposit, finance lease, and loan financing transactions with the Group[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) [Disclosable Information](index=66&type=section&id=Disclosable%20Information) This section covers information required for disclosure under the Listing Rules, including directors' and major shareholders' interests, share option schemes, share award schemes, board changes, controlling shareholder's specific performance obligations, interim dividend distribution, and share transfer registration suspension [Interests of Major Shareholders in Shares and Underlying Shares](index=68&type=section&id=Major%20Shareholders%20Interests%20in%20Shares%20and%20Underlying%20Shares) This section discloses major shareholders holding 5% or more of the company's shares as of June 30, 2021, with Beijing Enterprises Holdings Limited as the controlling shareholder and China Three Gorges Corporation as a significant shareholder Major Shareholder Holdings (June 30, 2021) | Shareholder Name | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | | Beijing Enterprises Holdings Limited (and parties acting in concert) | 4,121,607,070 | 41.12% | | China Three Gorges Corporation (and parties acting in concert) | 1,588,495,436 | 15.85% | [Share Option Scheme](index=70&type=section&id=Share%20Option%20Scheme) The company's share option scheme adopted on June 28, 2011, expired on June 27, 2021, with no new options granted thereafter, and 254,526,000 unexercised options remaining as of June 30, 2021 - The share option scheme expired on June 27, 2021 During the period, **2,200,000** share options were exercised[155](index=155&type=chunk)[157](index=157&type=chunk) [Specific Performance Obligations of Controlling Shareholder](index=74&type=section&id=Specific%20Performance%20Obligations%20of%20Controlling%20Shareholder) This section discloses specific performance covenants in various loan and note agreements, requiring the controlling shareholder, Beijing Enterprises Holdings Limited, to maintain a minimum shareholding and management control in the company - Several loan and note agreements totaling billions of Hong Kong Dollars equivalent contain specific performance covenants requiring the controlling shareholder, Beijing Enterprises Holdings, to maintain a minimum shareholding (e.g., **35% or 40%**) and control over the company[162](index=162&type=chunk)[163](index=163&type=chunk) [Interim Dividend](index=76&type=section&id=Interim%20Dividend) The Board resolved to declare an interim cash dividend of HKD 0.09 per ordinary share for the six months ended June 30, 2021 - The company announced an interim cash dividend of **HKD 0.09 per share**, higher than HKD 0.084 per share in the prior period[164](index=164&type=chunk)[109](index=109&type=chunk) [Corporate Governance](index=77&type=section&id=Corporate%20Governance) This section outlines the company's corporate governance practices, confirming compliance with the Corporate Governance Code, with one deviation, and effective risk management and internal control systems [Corporate Governance Compliance](index=77&type=section&id=Corporate%20Governance%20Compliance) The company complied with the Listing Rules' Corporate Governance Code during the reporting period, with one deviation due to the Chairman's inability to attend the AGM in person - The company complied with the Corporate Governance Code, with the sole deviation being the Chairman's inability to attend the AGM on June 9, 2021, due to global travel restrictions[167](index=167&type=chunk) [Audit Committee](index=77&type=section&id=Audit%20Committee) The Audit Committee, composed of three independent non-executive directors, oversees financial reporting, risk management, and internal controls, and has reviewed and approved the interim results - The Audit Committee, comprising three independent non-executive directors and chaired by Mr She Junle, has reviewed and approved the unaudited interim results for the six months ended June 30, 2021[169](index=169&type=chunk) [Risk Management and Internal Control](index=78&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is ultimately responsible for the Group's risk management and internal control systems, which were deemed effective and adequate for the period ended June 30, 2021 - The Board believes the Group's risk management and internal control systems were effective and adequate during the reporting period, with no significant issues found that could affect financial, operational, and compliance controls[170](index=170&type=chunk)

年報 2020 （於百慕達註冊成立之有限公司） （股份代號：371） 北控水務集團有限公司 2020 年報 （股份代號：371） （於百慕達註冊成立之有限公司） 目錄 | 公司資料 | 02 | | --- | --- | | 集團架構 | 03 | | 主席報告 | 04 | | 管理層討論及分析 | 09 | | 企業管治報告 | 33 | | 董事及高級管理人員 | 50 | | 董事會報告 | 55 | | 獨立核數師報告 | 90 | | 綜合損益表 | 97 | | 綜合全面收益表 | 98 | | 綜合財務狀況表 | 99 | | 綜合權益變動表 | 101 | | 綜合現金流量表 | 103 | | 財務報表附註 | 107 | | 五年財務概要 | 259 | 北控水務集團有限公司 2020年年報 01 目錄 公司資料 董事會 執行董事 李永成先生 （主席） 姜新浩先生 周 敏先生 （行政總裁） 李海楓先生 張鐵夫先生 柯 儉先生 沙 寧女士 董渙樟先生 李 力先生 非執行董事 趙 峰先生 獨立非執行董事 佘俊樂先生 張高波先生 郭 銳先生 王凱軍先生 李文俊博士 審核委員會 佘俊樂先生 （ ...