光大环境(00257) - 2019 - 中期财报

Corporate Information Financial Highlights The Group achieved strong growth in the first half of 2019, with revenue increasing by 38% year-on-year, EBITDA by 25%, and profit attributable to equity holders of the Company by 20%; however, basic earnings per share decreased by 10% due to the dilutive effect of the September 2018 rights issue, while total assets and liabilities both increased, with the gearing ratio slightly rising to 59% Financial Summary for H1 2019 (as of June 30) | Metric | H1 2019 (HKD thousands) | H1 2018 (HKD thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Performance | | | | | Revenue | 16,225,718 | 11,784,390 | +38% | | EBITDA | 5,500,987 | 4,414,814 | +25% | | Profit attributable to equity holders of the Company | 2,630,366 | 2,200,900 | +20% | | Basic EPS (HK cents) | 42.82 | 47.78 (Restated) | -10% | | Financial Position (Period-end Comparison) | As of June 30, 2019 | As of Dec 31, 2018 | Change | | Total Assets | 105,313,513 | 95,121,637 | +11% | | Total Liabilities | 62,003,357 | 54,426,298 | +14% | | Equity attributable to equity holders of the Company | 35,521,392 | 33,926,107 | +5% | | Gearing Ratio (%) | 59% | 57% | +2 ppt | - Return on equity and basic earnings per share decreased year-on-year during the reporting period, primarily due to the dilutive effect of the HKD 10 billion rights issue completed in September 2018[7] Business Review and Prospects Operating Results Overview In the first half of 2019, despite a complex macroeconomic environment, the Group's businesses achieved steady growth, with significant increases in construction service revenue due to accelerated project construction and substantial improvements in operation service revenue driven by more operating projects and effective cost control, laying a solid foundation for future development Overall Performance for H1 2019 | Metric | Amount (HKD thousands) | Y-o-Y Growth | | :--- | :--- | :--- | | Consolidated Revenue | 16,225,718 | 38% | | EBITDA | 5,500,987 | 25% | | Profit attributable to equity holders | 2,630,366 | 20% | - The Board declared an interim dividend of 13.0 HK cents per share, an increase from 12.0 HK cents in the same period of 2018, to reward shareholder support[15] - In terms of market expansion, the Group secured 38 new projects, signed 3 supplementary agreements, completed the acquisition of 2 environmental companies, and invested in a waste sorting technology enterprise, with a total investment of approximately RMB 15.83 billion during the period[17] Revenue Contribution by Major Business Segments for H1 2019 | Revenue Category | Amount (HKD thousands) | Y-o-Y Growth | Share of Total Revenue | | :--- | :--- | :--- | :--- | | Construction Service Revenue | 10,093,454 | 42% | 64% | | Operation Service Revenue | 4,181,319 | 40% | 26% | | Financial Income | - | - | 10% | Environmental Contribution for H1 2019 | Metric | Processing/Generation Volume | | :--- | :--- | | Household Waste Treatment | 11,709,000 tons | | Hazardous Waste Treatment | 82,000 tons | | Green Power Grid Connection | 5,232,771,000 kWh | | Wastewater Treatment | 673,051,000 cubic meters | I. Environmental Energy As a core business segment, Environmental Energy maintained strong momentum, signing 15 new projects with a total investment of RMB 8.29 billion, while 8 projects commenced operation, leading to significant growth in EBITDA and attributable net profit due to increased construction activities and enhanced operating capacity - As of June 30, 2019, the Environmental Energy segment had signed 106 waste-to-energy projects with a total investment of approximately RMB 58.209 billion, designed to process approximately 36.208 million tons of household waste annually[32] Environmental Energy Segment Operating and Financial Data (H1 2019) | Metric | H1 2019 | H1 2018 | Y-o-Y Growth | | :--- | :--- | :--- | :--- | | Household Waste Processed (tons) | 10,688,000 | 8,586,000 | +24% | | On-grid Power Generation (MWh) | 3,105,243 | 2,519,605 | +23% | | EBITDA (HKD thousands) | 3,430,724 | 2,644,042 | +30% | | Net Profit Attributable to the Group (HKD thousands) | 2,153,214 | - | +24% | II. Greentech The Greentech segment focuses on biomass integrated utilization, hazardous and solid waste treatment, and environmental remediation, adding 10 new projects and completing 2 company acquisitions with new investments of approximately RMB 3.64 billion, driving significant growth in both construction and operation service revenue and boosting profitability - As of the end of June 2019, Everbright Greentech had secured 107 projects with a total investment of approximately RMB 28.305 billion, covering biomass, hazardous and solid waste, photovoltaic and wind power, and environmental remediation[46] Greentech Segment Operating and Financial Data (H1 2019) | Metric | H1 2019 | H1 2018 | Y-o-Y Growth | | :--- | :--- | :--- | :--- | | Biomass Raw Material Processed (tons) | 2,020,000 | 1,310,000 | +54% | | Hazardous Waste Treated (tons) | 82,000 | 69,000 | +19% | | On-grid Power Generation (MWh) | 1,792,258 | 1,257,400 | +43% | | EBITDA (HKD thousands) | 1,372,635 | 1,030,591 | +33% | | Net Profit Attributable to the Group (HKD thousands) | 570,308 | - | +26% | III. Environmental Water The Environmental Water segment was listed on the Main Board of the Hong Kong Stock Exchange on May 8, 2019, achieving dual listing in Singapore and Hong Kong, securing 11 new projects with a total investment of approximately RMB 3.674 billion during the period, driving revenue growth and stable net profit improvement - Everbright Water was listed on the Main Board of the Hong Kong Stock Exchange on May 8, 2019, achieving dual listing in Singapore and Hong Kong, which helps expand its shareholder base and promote long-term development[55] Environmental Water Segment Operating and Financial Data (H1 2019) | Metric | H1 2019 | H1 2018 | Y-o-Y Growth | | :--- | :--- | :--- | :--- | | Wastewater Treated (cubic meters) | 673,051,000 | 612,498,000 | +10% | | EBITDA (HKD thousands) | 832,378 | 782,598 | +6% | | Net Profit Attributable to the Group (HKD thousands) | 313,547 | - | +12% | - During the period, 8 of its wastewater treatment plants were approved for water tariff increases, ranging from 4% to 56%[56] IV. Equipment Manufacturing The Equipment Manufacturing segment's comprehensive competitiveness continued to grow, signing 14 external sales contracts totaling approximately RMB 439 million and supplying 30 sets of grate furnaces for internal Group projects, increasing capacity by 173% year-on-year, with the Changzhou Equipment Manufacturing Center Phase III expansion completed to further boost production - During the period, 14 external sales contracts were signed, with total contracted sales of complete sets of equipment amounting to approximately RMB 439 million[61] - Provided 30 sets of grate furnaces for internal Group projects, with a designed daily waste processing capacity of 14,600 tons, representing a 173% year-on-year increase in production capacity[61] V. Envirotech The Group reformed its technological innovation by establishing a Technology Management Center and Technical Committee, and planning multiple research institutes, achieving progress in various R&D areas such as waste co-incineration, fly ash plasma melting, and smart power plants, securing 75 authorized patents, including 5 invention patents, during the period - In 2019, RMB 200 million was approved for scientific research investment, with 59 R&D projects implemented, and 75 patents authorized during the period, including 5 invention patents[70] - As of the first half of 2019, the Group had accumulated 667 authorized patents, including 99 invention patents[70] VI. Eco-recycling As an emerging business segment, Eco-recycling achieved a strong start in waste sorting, sanitation services, and recycled resource utilization, formally entering the waste sorting and resource recycling sector by investing RMB 45 million for a 90% equity stake in Shandong Quxiang, and signing two new integrated sanitation projects in Hubei Zhongxiang and Yunnan Yuxi - Entered the waste sorting and resource recycling business by investing RMB 45 million to acquire a 90% equity stake in Shandong Quxiang Information Technology Co., Ltd[74] - Signed two new integrated sanitation projects in Hubei Zhongxiang and Yunnan Yuxi, expanding waste collection and transportation services[75] VII. International Business The Group continued to expand its overseas business under the "Belt and Road" initiative, with 3 overseas environmental projects in Germany, Poland, and Vietnam as of the period-end; the German project operated stably, the Polish project processed over 305,000 tons of solid waste, and the Can Tho project in Vietnam processed approximately 84,000 tons of household waste - The Can Tho Waste-to-Energy project in Vietnam processed approximately 84,000 tons of household waste in the first half of the year, accounting for 60% of the local total collected volume, and provided approximately 23,440,000 kWh of green electricity[78] Post-results Events In July 2019, the Group successively signed 5 waste-to-energy projects with a total investment of approximately RMB 4.386 billion, adding a designed daily waste processing capacity of 5,250 tons - In July 2019, 5 new waste-to-energy projects were signed, with a total investment of approximately RMB 4.386 billion, adding a daily processing capacity of 5,250 tons[79][80] Business Prospects Looking ahead, the Group will leverage its traditional strengths to deepen its presence across the entire solid waste treatment value chain, aiming to become the largest "waste-free city" service provider, strategically forming a "1+2+4+10" development pattern centered on Everbright International, with 2 listed companies, 4 stocks, and 10 business centers including Environmental Energy, Greentech, Environmental Water, and Eco-recycling, with the goal of becoming a global leading ecological and environmental group within five to ten years - The Group is committed to becoming the largest "waste-free city" service provider, exploring a unique model covering waste sorting, source reduction, resource reuse, and harmless end-of-life disposal[82][83] - In the future, a "1+2+4+10" development pattern will be formed, establishing ten business centers, including Environmental Energy, Greentech, Environmental Water, Eco-recycling, Environmental Energy Conservation, Equipment Manufacturing, Overseas Business, Ecological Environment Planning and Design Institute, Green Technology Innovation Research Institute, and Waste-free City Research Institute[86] Management Discussion and Analysis Financial Position, Resources, and Borrowings As of June 30, 2019, the Group's total assets reached HKD 105.3 billion, with a gearing ratio of 59%; cash and bank balances were approximately HKD 12.8 billion, indicating ample liquidity, while total outstanding loans were about HKD 44.3 billion, primarily RMB-denominated floating-rate loans, with HKD 18.5 billion in unutilized banking facilities, demonstrating a robust financial structure Financial Position Summary (as of June 30, 2019) | Metric | Amount (HKD thousands) | Change from End of 2018 | | :--- | :--- | :--- | | Total Assets | 105,313,513 | +11% | | Gearing Ratio | 59% | +2 ppt | | Cash and Bank Balances | 12,833,617 | -19.7% | | Total Outstanding Loans | 44,298,057 | +14.9% | | Unutilized Banking Facilities | 18,491,747 | - | Use of Proceeds from the Company's Rights Issue The Company's rights issue completed in September 2018 raised net proceeds of approximately HKD 9.924 billion; as of June 30, 2019, approximately HKD 5.322 billion had been utilized, primarily for waste-to-energy projects, other environmental business development, and repayment of bank loans, with the remaining proceeds planned for future project investments and business development Summary of Use of Proceeds from Rights Issue (as of June 30, 2019) | Intended Use | Net Proceeds Raised (approx. HKD millions) | Amount Utilized (approx. HKD millions) | Remaining Unutilized Amount (approx. HKD millions) | | :--- | :--- | :--- | :--- | | Waste-to-Energy and Other Environmental Projects | 5,947 | 3,549 | 2,398 | | Other Environmental Businesses | 2,478 | 305 | 2,173 | | General Working Capital and Loan Repayment | 1,499 | 1,499 | 0 | | Total | 9,924 | 5,353 | 4,571 | Human Resources The Group highly values human resource management and employee training, establishing an Ecological Environment Academy for centralized training, strengthening talent acquisition through internal selection and external recruitment, and implementing various management measures to enhance HR efficiency; as of June 30, 2019, the Group employed approximately 11,700 staff - As of June 30, 2019, the Group employed approximately 11,700 staff in total[118] Principal Risks and Uncertainties The Group faces principal risks including policy changes, environmental compliance, project management, accounts receivable, employee management, market competition, NIMBY effect, and cost control; effective mitigation measures have been implemented, such as enhanced communication with regulators, robust environmental management systems, strict procurement bidding, and regular accounts receivable analysis, to ensure effective risk control - Key risk areas include: - Policy Change Risk: Increased emission standards or reduced fiscal and tax support may impact short-term profits[119] - Environmental Compliance Risk: Operational ESHS issues, unforeseen external changes, or human error may lead to non-compliance[122] - Project Management Risk: During peak construction, there is a risk of on-site management dereliction and deviation from bidding procedures[124] - Accounts Receivable Risk: Decreased government payment capacity or delayed national subsidies may lead to an increase in accounts receivable[125] - Market Competition Risk: The entry of numerous competitors into the environmental industry leads to intensified competition[129] Environmental and Social Management The Group highly prioritizes the environmental and social impacts of its operations, having established an Environmental and Social Management System (ESMS) and ESHS management system in accordance with the Asian Development Bank's Safeguard Policy Statement and international best practices; project operations strictly adhere to national and EU standards, pioneering several environmental initiatives in China, such as adopting EU 2010 standards, linking online emission monitoring data with environmental authorities for public disclosure, and fully opening environmental facilities to the public - The Group strictly complies with relevant environmental regulations, with waste incineration project emission standards superior to national standards, referencing EU 2010 standards[138][139] - The Group leads the industry in environmental information disclosure, being the first to: - Adopt EU Directive 2000/76/EC - Connect emission data online with environmental authorities - Disclose hourly average values of flue gas online monitoring for all operating waste-to-energy projects - Proactively open projects to the public for social supervision[140] Disclosure of Interests Directors' and Substantial Shareholders' Interests As of June 30, 2019, the Company's major shareholders, Central Huijin Investment Ltd. and China Everbright Group Ltd., indirectly held approximately 41.95% of the Company's shares, while GIC Private Limited held approximately 5.02%, and some directors also held minor shares in the Company and its listed subsidiaries Substantial Shareholders' Interests (as of June 30, 2019) | Shareholder Name | Capacity | Number of Shares (Long Position) | Approx. % of Issued Shares | | :--- | :--- | :--- | :--- | | Central Huijin Investment Ltd. | Interest in Controlled Corporations | 2,576,710,137 | 41.95% | | China Everbright Group Ltd. | Interest in Controlled Corporations | 2,576,710,137 | 41.95% | | GIC Private Limited | Investment Manager | 308,395,324 | 5.02% | Corporate Governance The Group is committed to maintaining high standards of corporate governance, having complied with all code provisions of the Corporate Governance Code throughout the reporting period; the Board comprises 5 executive directors and 4 independent non-executive directors, supported by five specialized committees—Audit, Risk Management, Nomination, Remuneration, and Disclosure—to ensure regulated, transparent, and efficient company operations - During the reporting period, the Company fully complied with all code provisions of the Corporate Governance Code as set out in Appendix 14 of the Hong Kong Listing Rules[165] - The Board has five committees: Audit Committee, Risk Management Committee, Nomination Committee, Remuneration Committee, and Disclosure Committee, each with clearly defined written terms of reference[167] Other Information This section discloses changes in directors' information, interim dividend distribution arrangements, and share transfer registration matters; the Company declared an interim dividend of 13.0 HK cents per share, with determined record and payment dates, and neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the reporting period 2019 Interim Dividend | Item | Details | | :--- | :--- | | Dividend per Share | 13.0 HK cents (2018: 12.0 HK cents) | | Record Date | September 13, 2019 (Friday) | | Payment Date | October 4, 2019 (Friday) or around | Interim Financial Report This interim financial report covers the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, and consolidated cash flow statement for the six months ended June 30, 2019, along with relevant notes to the financial statements, showing the Group's total revenue of HKD 16.226 billion, a 38% year-on-year increase, profit for the period of HKD 3.250 billion, up 23% year-on-year, and total assets growing to HKD 105.314 billion Core Financial Statement Data (as of June 30, 2019) | Metric | Amount (HKD thousands) | | :--- | :--- | | Consolidated Income Statement | | | Revenue | 16,225,718 | | Profit from Operating Activities | 5,030,341 | | Profit Before Tax | 4,297,013 | | Profit for the Period | 3,250,488 | | Consolidated Statement of Financial Position | | | Total Non-current Assets | 75,424,180 | | Total Current Assets | 29,889,333 | | Total Assets | 105,313,513 | | Total Current Liabilities | 17,267,965 | | Total Non-current Liabilities | 44,735,392 | | Total Liabilities | 62,003,357 | | Net Assets | 43,310,156 | CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CASH FLOWS Notes to Consolidated Financial Statements Report on Review of Interim Financial Information Ernst & Young, the auditor, has reviewed the Group's interim financial information in accordance with Hong Kong Standards on Review Engagements; the scope of review is substantially less than an audit, thus no audit opinion is expressed, and based on the review, the auditor found no matters that cause them to believe the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 - Auditor's Conclusion: Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[452]