中国光大水务(01857) - 2025 - 中期财报

Corporate Information This section provides an overview of the company's governance structure, key personnel, registered offices, and professional advisors Board of Directors The Board of Directors experienced changes during the reporting period, with Mr. Xiong Jianping appointed as Executive Director and President, and a new Sustainability Committee established - Mr. Xiong Jianping was appointed Executive Director and President on July 24, 2025, succeeding Mr. Tao Junjie who resigned[6][8] - The company established a Sustainability Committee on July 24, 2025, with Mr. Xiong Jianping as its Chairman[7][8] Registered Office and Contact Information The company maintains a registered address in Bermuda and operates offices in Shenzhen, Singapore, and Hong Kong, providing comprehensive contact and share registrar details - The company is registered in Bermuda and has offices in Shenzhen, China, Singapore, and Hong Kong, facilitating global operations and shareholder services[9][11] Auditors and Legal Advisors The company has appointed KPMG as its auditor in compliance with SGX and HKEX listing rules and engages multiple legal advisors for professional services - KPMG has served as the company's auditor under SGX and HKEX listing rules since the 2024 financial year[13][15] - The company engages Allen & Gledhill LLP, Li & Partners, and Beijing Yingke (Shenzhen) Law Firm as its legal advisors[14][15] Principal Bankers and Other Information The company collaborates with several major banks and provides public information such as its official website and stock codes - The company's principal bankers include Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, China Minsheng Bank, DBS Bank, Industrial and Commercial Bank of China, Mizuho Bank, and Postal Savings Bank of China[14][15] - The company's official website is www.ebwater.com, and its stock codes are U9E.SG (SGX) and 1857.HK (HKEX)[15][16] Financial Highlights This section summarizes the company's financial performance and position for the first half of FY2025, detailing revenue, profit, assets, and liabilities 1HFY2025 Financial Performance In 1HFY2025, the company's revenue decreased by 2% year-on-year to HKD 3.28 billion, while gross profit increased by 8% to HKD 1.369 billion, with gross margin improving by 4 percentage points to 42% 1HFY2025 Financial Performance Overview | Indicator | 1HFY2025 (Thousand HKD) | 1HFY2024 (Thousand HKD) | Percentage Change | | :--- | :--- | :--- | :--- | | Revenue | 3,279,565 | 3,352,595 | (2%) | | Gross Profit | 1,369,235 | 1,269,233 | 8% | | EBITDA | 1,194,117 | 1,196,486 | (0.2%) | | Profit Attributable to Equity Holders of the Company | 563,760 | 581,146 | (3%) | | Basic Earnings Per Share (HK cents) | 19.71 | 20.31 | (3%) | | Interim Dividend Per Share (HK cents) | 6.09 | 6.09 | – | | Interim Dividend Per Share (S$ cents) | 0.99 | 1.05 | (6%) | - Overall gross profit margin increased by 4 percentage points to 42% from 38% in the same period last year[17] 1HFY2025 Financial Position As of June 30, 2025, the company's total assets grew by 6% to HKD 38.213 billion, total liabilities increased by 7% to HKD 23.391 billion, and equity attributable to equity holders rose by 7% 1HFY2025 Financial Position Overview | Indicator | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | Percentage Change | | :--- | :--- | :--- | :--- | | Total Assets | 38,212,846 | 35,889,362 | 6% | | Total Liabilities | 23,391,257 | 21,897,684 | 7% | | Equity Attributable to Equity Holders of the Company | 12,614,517 | 11,835,120 | 7% | | Net Asset Value Per Share (HKD) | 4.41 | 4.14 | 7% | | Gearing Ratio (%) | 61.2 | 61.0 | 0.2ppt** | Business Review and Prospects This section reviews the company's operating performance, market expansion, project portfolio, operational efficiency, safety and environmental management, technological innovation, capital market activities, social responsibility, and future industry outlook Operating Results In 1HFY2025, China Everbright Water maintained its leading position in the industry by adhering to green, low-carbon, and high-quality development principles amidst a complex international environment, achieving progress across various operational aspects and maintaining its interim dividend - The company upholds green, low-carbon, and high-quality development principles, adheres to the general tone of seeking progress while maintaining stability, deepens core businesses, coordinates development and innovation, achieves steady operations, and continuously solidifies its industry-leading position[20][21] Overall Performance & Market Expansion The company experienced a slight decrease in revenue and profit attributable to equity holders in 1HFY2025 but achieved a significant improvement in gross margin, while expanding its light-asset business model in China and overseas with new contracts totaling approximately RMB 60 million 1HFY2025 Key Financial Indicators | Indicator | 1HFY2025 | 1HFY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 3.28 billion | HKD 3.353 billion | Decrease of 2% | | EBITDA | HKD 1.194 billion | HKD 1.196 billion | Largely flat | | Profit Attributable to Equity Holders of the Company | HKD 564 million | HKD 581 million | Decrease of 3% | | Basic Earnings Per Share | 19.71 HK cents | 20.31 HK cents | Decrease of 3% | | Overall Gross Profit Margin | 42% | 38% | Increase of 4 percentage points | - The company secured new light-asset business contracts totaling approximately RMB 60 million in Hubei, Jiangsu, Zhejiang provinces in China, and the Thai market, adding 10,000 cubic meters/day of industrial wastewater treatment design capacity[23][25] Project Portfolio & Capacity As of June 30, 2025, the company invested in and held 170 environmental protection projects with a total investment of approximately RMB 31.63 billion, spanning 13 provinces, municipalities, and autonomous regions in China, as well as overseas markets like Mauritius, achieving a total water treatment/supply capacity of 7,618,600 cubic meters/day - As of June 30, 2025, the company invested in and held 170 environmental protection projects, with a total investment of approximately RMB 31.63 billion[26][27] Project Count and Water Treatment/Supply Capacity by Category | Project Category | Project Count (Units) | Water Treatment/Supply Capacity (Cubic Meters/Day) | | :--- | :--- | :--- | | Municipal Wastewater Treatment Projects | 135 | 5,823,000 | | Industrial Wastewater Treatment Projects | 27 | 506,000 | | Reclaimed Water Projects | 8 | 324,600 | | River Basin Management Projects | 6 | 115,000 | | Water Supply Projects | 3 | 250,000 | | Raw Water Protection Projects | 1 | 600,000 | | Sludge Treatment and Disposal Projects | 2 | Not Applicable | | Livestock and Poultry Waste Resource Utilization Projects | 1 | Not Applicable | | Total | 183 | 7,618,600 | Operations Management & Efficiency Enhancement The company enhances operational quality and efficiency through technological innovation and refined management, implements cost reduction measures, establishes a digital supply chain system, expands open-source businesses, and operates photovoltaic power generation facilities at 12 projects, providing approximately 20 million kWh of green electricity annually - The company continues to implement refined management measures such as optimizing chemical types, precise dosing, and equipment energy performance contracting, further reducing operating costs for existing projects[31][32] - As of June 30, 2025, photovoltaic power generation facilities at 12 of the company's projects are operational, with a total installed capacity of approximately 20 MW, expected to provide about 20 million kWh of green electricity annually[31][32] - In 1HFY2025, the company received various government subsidies totaling approximately RMB 27.5 million; it cumulatively treated approximately 835 million cubic meters of wastewater and supplied approximately 20 million cubic meters of reclaimed water[31][32] Safety & Environmental Management The company continuously strengthens safety and environmental leadership, conducts "Safety Production Month" activities, and promotes a "Three-Year Action Plan for Fundamental Safety Production Improvement" to achieve "zero safety accidents and zero environmental incidents" in engineering construction and operational projects - The company organized "Safety Production Month" activities and continuously promoted the "Three-Year Action Plan for Fundamental Safety Production Improvement," strengthening supervision of safety and environmental work[33][36] - The company achieved the goal of "zero safety accidents and zero environmental incidents" ("dual zero") for engineering construction and operational projects, maintaining a stable safety production situation[33][36] Technological Innovation & Project Construction Adhering to a "technology innovation-led development" strategy, the company obtained 3 new authorized intellectual property rights, including 1 invention patent, in 1HFY2025, while commencing 2 new projects and completing 5 projects, adding 700,000 cubic meters/day of wastewater treatment design capacity - In 1HFY2025, the company obtained 3 new authorized intellectual property rights, including 1 invention patent[34][36] - The company commenced construction on 2 new projects with a design capacity of 15,000 cubic meters/day of reclaimed water supply; 5 projects were completed and put into operation, with a design capacity of 700,000 cubic meters/day of wastewater treatment[35][36] Capital Market & Financing The company continuously optimizes its financing structure to reduce financial costs by adjusting loan terms, currencies, and interest rates, strengthens accounts receivable management, and completed three tranches of medium-term notes totaling RMB 3.2 billion in mainland China during 1HFY2025 - The company continuously optimizes its financing structure by adjusting loan terms, currencies, and interest rates to reduce financial costs, while strengthening accounts receivable management to effectively control liquidity risks[37][38] 1HFY2025 Major Financing Arrangements | Issuance Date | Financing Arrangement and Use of Proceeds | Issuance Size (RMB) | | :--- | :--- | :--- | | January 2025 | Issuance of the first tranche of medium-term notes for 2025, used to supplement working capital | RMB 1.5 billion | | April 2025 | Issuance of the second tranche of medium-term notes for 2025, used to repay maturing debt | RMB 1 billion | | June 2025 | Issuance of the third tranche of medium-term notes for 2025, used to redeem existing perpetual medium-term notes | RMB 0.7 billion | Social Responsibility & Awards The company actively fulfills its corporate social responsibility, participates in industry exchanges, conducts environmental public welfare activities, and launched its "World Environment Day" series of brand public welfare activities for the eighth consecutive year, receiving multiple accolades during the reporting period - The company launched its "World Environment Day" series of brand public welfare activities for the 8th consecutive year; as of June 30, 2025, 49 projects are open to the public, having hosted over 6,000 visitors in 1HFY2025[40][41] 1HFY2025 Major Awards | Award Name | Awarding Body | | :--- | :--- | | One of the "Top 10 Influential Enterprises in China's Water Industry" (8th consecutive year) | E20 Environmental Platform | | "Benchmark Award for Smart Circular Governance of Water Ecology" | 1st Macao 2025 ESG Excellence Awards | | First inclusion in "The Sustainability Yearbook" (China Edition) | S&P Global | | Everbright Water (Suzhou) Co., Ltd. and Everbright Water (Zibo) Co., Ltd. selected for the "First Batch of Youth Ecological Civilization Education Practice Venues" list | China Ministry of Ecology and Environment Publicity and Education Center | | Zibo Zhangdian Eastern Chemical Industrial Park Industrial Wastewater Treatment Project in Shandong rated as an "Excellent Case for Industrial Park Wastewater Treatment" | E20 Environmental Platform | | Zibo Water and Shandong Binzhou Development Zone Wastewater Treatment Project rated as an "Excellent Case for Municipal Wastewater Treatment" | E20 Environmental Platform | Interim Dividend The Board of Directors declared an interim dividend of 6.09 HK cents per ordinary share for 1HFY2025, consistent with the prior year, to continue sharing operating results with shareholders - The Board of Directors declared an interim dividend of 6.09 HK cents (equivalent to 0.99 S$ cents) per ordinary share for 1HFY2025, consistent with 1HFY2024[44][46] Industry Prospects The company will actively seize development opportunities in the environmental protection industry, focusing on "stable growth in scale and stable improvement in efficiency" as dual priorities, and driving business with unconventional thinking and measures - The company will actively assess and seize development opportunities in the environmental protection industry, adhering to the general tone of seeking progress while maintaining stability, and focusing on the "dual priorities" of stable growth in scale and stable improvement in efficiency[45][47] - The company will focus on five core tasks: scale growth, cost reduction and efficiency improvement, accounts receivable collection, compliance and risk control, and organizational optimization, to drive its transformation from a "traditional water operator" to a "technology-driven environmental service provider"[45][47] Management Discussion and Analysis This section provides a detailed analysis of the company's financial performance, financial position, resources, borrowings, foreign exchange risks, asset pledges, commitments, contingent liabilities, and significant events Financial Results In 1HFY2025, the company's revenue decreased by 2% year-on-year, primarily due to reduced construction service revenue, although operating revenue increased, while gross profit grew by 8% and profit attributable to equity holders decreased by 3% 1HFY2025 Revenue Composition and Gross Profit Change | Indicator | 1HFY2025 (Billion HKD) | 1HFY2024 (Billion HKD) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 3.280 | 3.353 | Decrease of 2% | | Construction Service Revenue | 1.164 | 1.355 | Decrease | | Operating Revenue | 1.477 | 1.301 | Increase | | Finance Income | 0.559 | 0.564 | Slight decrease | | Gross Profit | 1.369 | 1.269 | Increase of 8% | | Profit Attributable to Equity Holders of the Company | 0.564 | 0.581 | Decrease of 3% | Financial Position As of June 30, 2025, the company's total assets were approximately HKD 38.21 billion, with net assets of HKD 14.82 billion, while net asset value per share increased by 7% to HKD 4.41, and the gearing ratio slightly rose by 0.2 percentage points to 61.2% - As of June 30, 2025, the company's total assets were approximately HKD 38.21 billion, with net assets of HKD 14.82 billion[49][51] - Net asset value attributable to equity holders of the company was HKD 4.41 per share, an increase of 7% compared to the end of FY2024[49][51] - The gearing ratio was 61.2%, a slight increase of 0.2 percentage points from 61.0% at the end of FY2024[49][51] Financial Resources The company adopts a prudent cash and financial management strategy, with primary funding sources including internal cash flow, bank loans, and bond issuance, holding approximately HKD 1.87 billion in cash and bank balances as of June 30, 2025, with about 99% denominated in HKD and RMB - As of June 30, 2025, the company held cash and bank balances of approximately HKD 1.87 billion, an increase of HKD 21.97 million from the end of FY2024[52][53] - The majority of the company's cash and bank balances (approximately 99%) are denominated in HKD and RMB[52][53] Group Borrowings and Debt Securities As of June 30, 2025, the company's outstanding borrowings totaled HKD 17.26 billion, an increase of HKD 867 million from the end of FY2024, with 60% fixed-rate and 40% floating-rate, all denominated in RMB, and HKD 5.08 billion of its HKD 12.33 billion bank loan facilities remaining unutilized Group Borrowings and Debt Securities Overview | Indicator | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Payable within one year or on demand (secured) | 473,698 | 452,917 | | Payable within one year or on demand (unsecured) | 3,255,711 | 3,728,412 | | Payable after one year (secured) | 4,140,151 | 4,268,921 | | Payable after one year (unsecured) | 9,386,820 | 7,939,360 | - As of June 30, 2025, the company's outstanding borrowings totaled HKD 17.26 billion, an increase of HKD 866.77 million from the end of FY2024[57][61] - All borrowings are denominated in RMB, with 60% being fixed-rate and 40% floating-rate[57][61] - The company has bank loan facilities of HKD 12.33 billion, of which HKD 5.08 billion remains unutilized[57][61] Foreign Exchange Risks Operating primarily in China, the company faces foreign currency transaction and translation risks involving USD, EUR, SGD, KRW, HKD, and RMB, which impacted 1HFY2025 results, but the Board believes future fluctuations will not materially affect operations, and no formal hedging policy is in place - The company primarily operates in China and faces foreign currency transaction and translation risks involving USD, EUR, SGD, KRW, HKD, and RMB[59][62] - While 1HFY2025 was affected by exchange rate fluctuations, the company has not adopted any formal hedging policy or used any financial instruments for hedging purposes[59][62] Pledge of Assets As of June 30, 2025, certain bank loan facilities and asset-backed securities issuances are secured by related revenue, intangible assets, contract assets, and receivables under service concession arrangements, with a total net book value of pledged assets amounting to HKD 9.37 billion - As of June 30, 2025, the total net book value of pledged assets was HKD 9.37 billion, used to secure bank loan facilities and asset-backed securities issuances[63][66] Commitments As of June 30, 2025, the company had procurement commitments of HKD 279.15 million for construction contracts and capital commitments of HKD 5.46 million for a joint venture, planning to fund these through internal resources, external borrowings, or a combination of both - As of June 30, 2025, the company had procurement commitments of HKD 279.15 million contracted for construction projects[64][67] - The company had capital commitments of HKD 5.46 million related to capital injection into a joint venture[64][67] Contingent Liabilities As of June 30, 2025, the company provided financial guarantees for two subsidiaries with a maximum liability provision of HKD 1.93 billion, but the Board considers the likelihood of claims against the company under these guarantees to be low, thus no contingent liabilities were recognized at the consolidated level - As of June 30, 2025, the company provided financial guarantees for two subsidiaries, with a maximum liability provision of HKD 1.93 billion[65][68] - The Board believes the likelihood of claims being made against the company by the holders of these guarantees is low, thus no contingent liabilities were recognized at the consolidated level[65][68] Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures In 1HFY2025, the company established a subsidiary, EW (Zhengzhou) Water Operation Co., Ltd., and formed a joint venture with Everbright Environment and others, with a registered capital of RMB 50 million - The company established a subsidiary, Everbright Water (Zhengzhou) Water Operation Co., Ltd., with a registered capital of RMB 6 million, to undertake two wastewater treatment plants in Henan Province[69][70] - The company entered into a joint venture agreement with China Everbright Environment Group Limited and others to establish a joint venture with a registered capital of RMB 50 million, in which the company holds a 10% stake[69][70] Significant Investments During the review period, the company did not hold any significant investments representing 5% or more of the Group's total assets - The company held no significant investments representing 5% or more of the Group's total assets during the review period[72][76] Future Plans for Material Investments or Capital Assets Apart from future plans disclosed in the listing document on April 24, 2019, the company had no other future plans for material investments or capital asset acquisitions in 1HFY2025 - Apart from those disclosed in the listing document on April 24, 2019, the company had no other future plans for material investments or capital asset acquisitions in 1HFY2025[73][77] Events After the Reporting Period Effective July 24, 2025, Mr. Xiong Jianping was appointed Executive Director and President, and the company established a Sustainability Committee to oversee ESG matters - Effective July 24, 2025, Mr. Xiong Jianping was appointed Executive Director and President, succeeding Mr. Tao Junjie[74][78] - On the same day, the company established a Sustainability Committee under the Board of Directors to oversee the management of environmental, social, and governance (ESG) matters[74][78] Interested Person Transactions Mandate and Aggregate Value of Such Transactions The company's general mandate for interested person transactions was renewed at the Annual General Meeting on April 23, 2025, with the aggregate value of such transactions exceeding S$100,000 in 1HFY2025, primarily involving its controlling shareholder and its associates - The company's general mandate for interested person transactions was renewed at the Annual General Meeting held on April 23, 2025[79][80] 1HFY2025 Aggregate Value of Interested Person Transactions (Exceeding S$100,000) | Name of Interested Person | Nature of Relationship | Aggregate Value of All Interested Person Transactions Conducted Under the Interested Person Transactions Mandate (HKD) | | :--- | :--- | :--- | | Everbright Environment | Controlling Shareholder | 84,891,000 (equivalent to S$14,449,000) | | Everbright Securities Company Limited | Associate of Controlling Shareholder | 4,119,000 (equivalent to S$701,000) | | Everbright Everbright Life Insurance Co., Ltd. | Associate of Controlling Shareholder | 1,019,000 (equivalent to S$173,000) | Internal Management The company has established a robust corporate governance framework with five Board committees, a Management Committee (now replaced by the President's Office Meeting) overseeing daily operations, multiple functional departments, eight regional management centers, and fully implemented ESHS and risk management systems to enhance management quality and risk control capabilities - The company has established a robust corporate governance framework, with five committees under the Board of Directors: Audit, Remuneration, Nominating, Strategy, and Sustainability[82][84] - The Management Committee was dissolved effective August 12, 2025, and its functions and responsibilities have been assumed by the President's Office Meeting[85] - The company fully implements Environmental, Safety, Health, and Social Responsibility (ESHS) management systems and risk management systems to standardize management across all stages of project investment, construction, and operation[86][88] Human Resource Management Adhering to a "people-oriented" philosophy, the company deeply implements its talent strategy, employing approximately 1,860 staff as of June 30, 2025, and ensuring employee rights and enhancing capabilities through online and offline training, dynamic selection mechanisms, and optimized compensation plans to provide talent assurance for high-quality development - As of June 30, 2025, the company employed approximately 1,860 staff (including Hong Kong and Singapore)[91][93] - The company enhances the capabilities of management personnel and employees through specialized training programs such as "Cloud Sail Program," "Voyage Program," and "Management Talent Soul-Forging and Empowerment"[89][90] - The company continuously optimizes its compensation distribution plan, prioritizing frontline production staff, key core positions, urgently needed talent, and departments and individuals with outstanding performance in performance appraisals[89][90] Principal Risks and Uncertainties During the review period, the company continuously strengthened risk management, identified and assessed major risks such as policy changes, new business investment and market competition, environmental compliance and safety production management, accounts receivable, project management, staffing, financing management, and cost control, and formulated corresponding control measures - The company, based on the requirements of its "Risk Management System" and "Risk Management Manual," fully identified and assessed the major risks faced during the review period and formulated targeted control measures[92][94] Policy Changing Risk The company faces risks from changes in laws and policies in China's wastewater treatment, river basin ecological restoration, and sponge city construction sectors, with countermeasures including closely monitoring policy changes, organizing teams for research and interpretation, and timely adjusting strategies and business models - The company faces risks from changes in laws and policies in China's wastewater treatment, river basin ecological restoration, sponge city construction, reclaimed water reuse, water supply, wastewater source heat pump, potential new business investment projects, and PPP mechanisms[95][97] - Countermeasures include assigning dedicated personnel to regularly update and summarize national laws and policies, organizing internal teams and external experts to research and interpret new regulations, and timely adjusting development strategies and business models[98][99] New Business Investment and Market Competition Risks With increasing competition in the water industry, the company faces risks of unsatisfactory investment returns or unclear competitive advantages, addressed by focusing on core businesses, increasing new business research, expanding overseas operations, and driving business development through technology - With a large influx of capital and competitors into the water industry, overall market competition is intensifying, and the company faces risks of unsatisfactory investment returns or unclear competitive advantages[100][102] - Countermeasures include re-evaluating and optimizing development strategies, focusing on "pan-water" core businesses, strengthening light-asset service capabilities, increasing new business research, actively expanding overseas operations, and driving business development through "five small innovations" and other methods[103][106] Environmental Compliance and Safety Production Management Risks As the Chinese government strengthens environmental compliance and safety production management regulations, the company faces increasing compliance pressure, addressed by enhancing process control, emphasizing safety management capacity building, conducting investigations and special rectifications, strengthening education and training, and improving monitoring and early warning systems - The Chinese government has introduced and revised several laws and regulations concerning environmental compliance and safety production management, strengthening relevant supervision and penalties, leading to increasingly severe environmental compliance and safety production management pressure for the company[107][109] - Countermeasures include strengthening control in all aspects of business expansion, design, engineering construction, and operation, comprehensively implementing the all-staff safety and environmental responsibility system, continuously carrying out special investigations and rectifications of major accident hazards, strengthening training and assessment for safety and environmental personnel, and fully utilizing information sharing platforms, environmental monitoring platforms, and testing platforms to enhance monitoring and early warning[110][113] Trade Receivables Risk With local Chinese governments as its primary clients, the company faces accounts receivable collection risks due to macroeconomic impacts, addressed by improving management mechanisms, implementing differentiated collection strategies, exploring diversified recovery channels, and strengthening liquidity management - The company's primary clients are local Chinese governments, and a decline in their fiscal payment capacity or delayed payment of service fees could impact the company's capital management and profits[114][116] - Countermeasures include prioritizing accounts receivable collection, establishing a "special team, ledger, incentive, and assessment" work mechanism, implementing differentiated collection strategies, exploring diversified recovery channels such as "phased clearance of historical arrears," and strengthening liquidity management[117][119] Construction Project Management Risk Construction projects are susceptible to various factors that can lead to safety, quality, schedule, and cost issues, addressed by strengthening engineering information management, schedule control, budget control, and conducting on-site special and random inspections - Construction projects are affected by various factors such as design flaws, insufficient personnel, tight schedules, and inadequate contractor supervision, which can lead to engineering safety, quality issues, schedule delays, and cost control problems[120][122] - Countermeasures include implementing full-process management through an engineering management information system, comprehensively tracking the progress of all construction projects, strictly controlling project budgets, and continuously conducting special and random inspections for safety, environment, and quality in engineering projects[123][126] Staff Deployment Risk The water industry requires long cultivation periods for key management and technical talent, and personnel turnover can adversely affect business development, addressed by fostering corporate culture, establishing a talent reserve, providing regular employee training, and optimizing selection and appointment systems - The cultivation of key management and technical talent in the water industry has a certain cycle, and if key personnel leave and suitable replacements cannot be found in the short term, it may adversely affect the company's business development[127][129] - Countermeasures include continuously committing to corporate culture building, establishing a talent reserve and regularly conducting professional training, and optimizing the selection and appointment system to facilitate employee career progression[130][131] Financing Management Risk The capital-intensive business model of the water industry requires significant upfront investment, exposing the company to risks in financing cost control and securing financing scale, addressed by scientifically formulating financing plans, timely adjusting loan structures, and strengthening liquidity management - The capital-intensive business model of the water industry requires the company to invest significant funds upfront for project construction, with service fees recovered gradually after construction completion and entry into the operational phase, posing risks in financing cost control and securing financing scale[132][134] - Countermeasures include scientifically formulating financing plans, coordinating the management of domestic and international funds, timely adjusting loan structures, strictly controlling asset-liability ratios and fund utilization, and continuously urging project companies to actively collect wastewater treatment service fees and reduce the scale of accounts receivable[135][136] Cost Control Risk Market fluctuations and policy impacts may lead to increased costs due to price adjustments by upstream suppliers, addressed by exploring operational potential, leveraging centralized procurement advantages, and strengthening budget and process control - Due to market fluctuations and relevant Chinese government policies, upstream suppliers may increase prices due to regulatory policies, production capacity limitations, and rising costs, leading to increased costs[137][139] - Countermeasures include continuously prioritizing energy saving and consumption reduction in operations, reducing production costs through operational benchmarking and refined management, fully leveraging the scale and flexibility advantages of centralized and regional procurement, and establishing strict budget targets for all ongoing and operational projects, strengthening budget and process control[140][141] Environmental and Social Management The company actively fulfills its environmental and social responsibilities, integrating ESHS management into its operations, with all projects certified or seeking certification for international management systems, strictly adhering to environmental laws, and most projects' effluent quality meeting or exceeding national standards, with no significant violations in 1HFY2025, and a newly established Sustainability Committee to oversee ESG matters - All of the company's projects have obtained or are applying for international management system certifications such as ISO 9001 Quality Management System, ISO 14001 Environmental Management System, and ISO 45001 Occupational Health and Safety Management System[142][143] - The company strictly complies with environmental protection, safety production, occupational health, and social responsibility laws and regulations, with the effluent quality of most projects meeting or even exceeding the Class 1A standard of the "Discharge Standard of Pollutants for Municipal Wastewater Treatment Plants" (GB18918-2002)[144][145] - In 1HFY2025, the company had no record of significant losses or impacts due to non-compliant activities or violations of environmental and social laws and regulations[144][145] - Effective July 24, 2025, the company established a Sustainability Committee under the Board of Directors to oversee the management of ESG matters[146][148] - As of June 30, 2025, 49 of the company's projects are officially open to the public, having hosted 122 public visits and over 6,000 visitors in 1HFY2025[149][150] Disclosure of Interests This section details the interests and short positions of directors, chief executive, substantial shareholders, and other persons in the company's shares, underlying shares, and debentures Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures As of June 30, 2025, none of the company's directors, chief executive, or their respective associates held any interests or short positions in the shares, underlying shares, or debentures of the company and/or any associated corporations - As of June 30, 2025, none of the company's directors, chief executive, or their respective associates held any interests or short positions in the shares, underlying shares, or debentures of the company and/or any associated corporations[151][153] Directors' Rights to Acquire Shares or Debentures During the review period, neither the company nor any of its subsidiaries, holding companies, or fellow subsidiaries participated in any arrangements enabling directors to acquire benefits by purchasing shares or debentures of the company or any other body corporate - At no time during the review period did the company, its subsidiaries, holding company, or fellow subsidiaries participate in any arrangements enabling directors to acquire benefits by purchasing shares or debentures of the company or any other body corporate[152][154] Substantial Shareholders' and Other Persons' Interests and Short Positions in the Shares and Underlying Shares of the Company As of June 30, 2025, Central Huijin Investment Ltd., China Everbright Group Co., Ltd., China Everbright Group Ltd., Guildford Limited, Everbright Environment, and China Everbright Water Holdings Limited were all deemed to hold 72.87% of the company's shares Substantial Shareholders' Long Positions in the Company's Shares (as of June 30, 2025) | Name of Substantial Shareholder | Capacity | Nature of Interest | Number of Shares Held (Ordinary Shares) | Approximate Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | :--- | | Central Huijin Investment Ltd. | Interest in controlled corporations | Corporate interest | 2,084,724,572 | 72.87% | | China Everbright Group Co., Ltd. | Interest in controlled corporations | Corporate interest | 2,084,724,572 | 72.87% | | China Everbright Group Ltd. | Interest in controlled corporations | Corporate interest | 2,084,724,572 | 72.87% | | Guildford Limited | Interest in controlled corporations | Corporate interest | 2,084,724,572 | 72.87% | | Everbright Environment | Interest in controlled corporations | Corporate interest | 2,084,724,572 | 72.87% | | China Everbright Water Holdings Limited | Beneficial owner | Corporate interest | 2,084,724,572 | 72.87% | - The aforementioned substantial shareholders are ultimately controlled by Central Huijin Investment Ltd., which is indirectly wholly owned by the State Council of China, through a multi-layered holding structure[164] Share Scheme The company did not have any share schemes in place during the review period - The company had no share schemes during the review period[162][163] Corporate Governance This section outlines the company's commitment to high standards of corporate governance, its practices, and the roles of its Board committees Corporate Governance Practices The company maintains sound corporate governance practices to enhance long-term value and shareholder returns, adhering to both Singapore and Hong Kong corporate governance codes, and complying with stricter provisions where conflicts arise - The company's corporate governance practices comply with the principles and provisions of the 2018 Code of Corporate Governance in Singapore and the Corporate Governance Code set out in Appendix C1 of the HKEX Listing Rules[166][168] - In case of any conflict between the Singapore Code of Corporate Governance and the Hong Kong Corporate Governance Code, the company will comply with the stricter provisions[166][168] Board Committees The Board of Directors holds regular meetings and has established five committees—Audit, Remuneration, Nominating, Strategy, and Sustainability—each with clear terms of reference to ensure good corporate governance - The Board of Directors holds regular meetings (at least four times a year) and has established an Audit Committee, a Remuneration Committee, a Nominating Committee, a Strategy Committee, and a Sustainability Committee[169][171] Audit Committee The Audit Committee, composed of four independent non-executive directors, is responsible for reviewing financial reporting, the adequacy and effectiveness of internal control and risk management systems, and the independence and effectiveness of external auditors - The Audit Committee, comprising four independent non-executive directors, is responsible for reviewing significant financial reporting matters and judgments, and overseeing the integrity of the Group's financial statements[170][174] - The committee reviews and reports to the Board on the adequacy and effectiveness of the Group's internal control and risk management systems, as well as the independence and objectivity of the external auditors[170][174] Remuneration Committee The Remuneration Committee, consisting of three independent non-executive directors, is responsible for determining the remuneration packages of directors and key management personnel, ensuring alignment with the Group's long-term interests and risk policies, and attracting, retaining, and motivating talent - The Remuneration Committee, comprising three independent non-executive directors, is responsible for determining the remuneration packages of each director and key management personnel through a formal, transparent, and objective process[175][177] - The committee ensures that remuneration levels are consistent with the Group's long-term interests and risk policies, and are appropriate for attracting, retaining, and motivating talent[175][177] Nominating Committee The Nominating Committee, composed of three independent non-executive directors and one non-executive director who is also the Chairman, is responsible for implementing the appointment and re-election procedures for Board members and evaluating the overall performance of the Board and its committees - The Nominating Committee comprises three independent non-executive directors and Mr. Luan Zusheng, the Non-Executive Director and Chairman[176][178] - The committee is responsible for implementing formal and transparent procedures for the appointment and re-election of Board members, and for evaluating the performance of individual Board members, Board committee members, and the overall performance of the Board and Board committees[176][178] Strategy Committee The Strategy Committee, comprising the Chairman, two executive directors, and two independent non-executive directors, is primarily responsible for assisting the Board in providing strategic direction, overseeing the Group's strategic plans and implementation, and reviewing management's proposed medium- and long-term strategic objectives - The Strategy Committee comprises Mr. Luan Zusheng (Chairman), Mr. Xiong Jianping and Mr. Wang Yuexing (Executive Directors), and Ms. Hao Gang and Mr. Wong Yue Hiong (Independent Non-Executive Directors)[179][181] - The committee's primary responsibilities include assisting the Board in providing strategic direction to the Group, overseeing the Group's strategic plans and implementation, and reviewing management's proposed medium- and long-term strategic objectives[179][181] Sustainability Committee The Sustainability Committee, composed of the Executive Director and President and three independent non-executive directors, is responsible for overseeing the management of ESG matters and evaluating issues and risks related to the Group's sustainable development and ESG - The Sustainability Committee comprises Mr. Xiong Jianping (Executive Director and President), and Ms. Hao Gang, Mr. Wong Yue Hiong, and Ms. Chan Pui Shan (Independent Non-Executive Directors)[180][182] - The committee's primary responsibilities include overseeing the management of ESG matters, evaluating issues and risks related to the Group's sustainable development and ESG, and making recommendations to the Board[180][182] Dealings in the Securities The company has adopted an internal code of conduct to regulate securities dealings by directors, officers, and relevant employees, in compliance with HKEX and SGX listing rules, prohibiting trading when possessing unpublished price-sensitive information and during specific blackout periods - The company has adopted an internal code of conduct to regulate securities dealings by directors, officers, and relevant employees who may possess unpublished price-sensitive information[183][184] - This code complies with the HKEX Listing Rules and the Hong Kong Corporate Governance Code, as well as the SGX Listing Manual and the Singapore Code of Corporate Governance[183][184] - Directors, officers, and relevant employees are prohibited from dealing in the company's securities 30 days prior to the announcement of interim results and 60 days prior to the announcement of annual results[185] Other Information This section provides additional disclosures including changes in directors' information, interim dividend details, book closure dates, and review of interim financial information Changes in Directors' Information In accordance with HKEX Listing Rules, Ms. Hao Gang, an independent non-executive director, ceased to serve as Associate Dean (China Executive Programs and Outreach) of the College of Business at City University of Hong Kong effective August 1, 2025 - Ms. Hao Gang, an independent non-executive director of the company, ceased to serve as Associate Dean (China Executive Programs and Outreach) of the College of Business at City University of Hong Kong effective August 1, 2025[189][193] Interim Dividend The Board announced an interim dividend of 6.09 HK cents per ordinary share for 1HFY2025, consistent with the prior year, with payment expected on or about September 12, 2025 - The Board announced an interim dividend of 6.09 HK cents (equivalent to 0.99 S$ cents) per ordinary share for 1HFY2025, consistent with 1HFY2024[191][194] - The 1HFY2025 interim dividend is expected to be paid on or about Friday, September 12, 2025[192][194] Books Closure Date(s) To determine eligibility for the 1HFY2025 interim dividend, the Singapore share transfer books will close at 5:00 PM on August 28, 2025, and the Hong Kong branch share register will be closed from August 29 to September 1, 2025 - The Singapore share transfer books will be closed at 5:00 PM (Singapore time) on Thursday, August 28, 2025[195][197] - The Hong Kong branch share register will be closed from Friday, August 29, 2025, to Monday, September 1, 2025 (both days inclusive), during which no share transfers will be registered[198][201] Purchase, Sale or Redemption of Listed Securities For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of its listed securities, and the company held no subsidiary-held shares - For the six months ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of its listed securities[200][202] - As of June 30, 2025, the company held no subsidiary-held shares[200][202] Review of Interim Financial Information The Audit Committee has reviewed the company's unaudited financial statements and interim report for 1HFY2025, including the accounting principles and practices adopted - The Audit Committee has reviewed the company's unaudited financial statements and interim report for 1HFY2025, including the accounting principles and practices adopted by the company[203] Interim Financial Report This section presents the company's condensed consolidated interim financial statements, including the statement of comprehensive income, financial position, changes in equity, cash flows, and detailed notes to the financial information Condensed Consolidated Statement of Comprehensive Income In 1HFY2025, the company's revenue decreased by 2% year-on-year, but gross profit increased by 8%, while profit attributable to equity holders decreased by 3%, and basic earnings per share were 19.71 HK cents, with other comprehensive income primarily affected by exchange differences Condensed Consolidated Statement of Comprehensive Income Summary | Indicator | 1HFY2025 (Thousand HKD) | 1HFY2024 (Thousand HKD) | | :--- | :--- | :--- | | Revenue | 3,279,565 | 3,352,595 | | Gross Profit | 1,369,235 | 1,269,233 | | Profit Before Tax | 832,211 | 815,307 | | Profit for the Period | 625,324 | 627,568 | | Profit Attributable to Equity Holders of the Company | 563,760 | 581,146 | | Other Comprehensive Income/(Loss) for the Period | 408,463 | (157,099) | | Total Comprehensive Income for the Period | 1,033,787 | 470,469 | | Basic Earnings Per Share (HK cents) | 19.71 | 20.31 | Condensed Consolidated Statement of Financial Position As of June 30, 2025, the company's total assets increased to HKD 38.213 billion, with contract assets representing the largest portion, while net assets stood at HKD 14.822 billion, and the gearing ratio was 61.2% Condensed Consolidated Statement of Financial Position Summary | Indicator | June 30, 2025 (Thousand HKD) | December 31, 2024 (Thousand HKD) | | :--- | :--- | :--- | | Total Non-Current Assets | 27,121,929 | 25,931,236 | | Total Current Assets | 11,090,917 | 9,958,126 | | Total Assets | 38,212,846 | 35,889,362 | | Total Current Liabilities | 7,544,712 | 7,521,411 | | Total Non-Current Liabilities | 15,846,545 | 14,376,273 | | Total Liabilities | 23,391,257 | 21,897,684 | | Total Equity | 14,821,589 | 13,991,678 | | Equity Attributable to Equity Holders of the Company | 12,614,517 | 11,835,120 | - As of June 30, 2025, contract assets (non-current and current) totaled HKD 23.808 billion, accounting for 62.3% of total assets[218] Condensed Consolidated Statement of Changes in Equity In 1HFY2025, total comprehensive income attributable to equity holders of the company was HKD 946 million, primarily influenced by profit for the period and foreign currency translation differences, with perpetual capital instruments issued and partially redeemed during the period Condensed Consolidated Statement of Changes in Equity Summary (Attributable to Equity Holders of the Company) | Indicator | 1HFY2025 (Thousand HKD) | 1HFY2024 (Thousand HKD) | | :--- | :--- | :--- | | Equity at Beginning of Period | 11,835,120 | 11,406,121 | | Profit for the Period | 563,760 | 581,146 | | Foreign Currency Translation Differences | 382,460 | (145,236) | | Total Comprehensive Income for the Period | 946,220 | 435,910 | | Final Dividends Declared | (166,823) | (165,424) | | Issuance of Perpetual Capital Instruments | 755,686 | – | | Redemption of Perpetual Capital Instruments | (806,982) | – | | Equity at End of Period | 12,614,517 | 11,676,607 | Condensed Consolidated Statement of Cash Flows In 1HFY2025, net cash flow from operating activities was HKD 132 million, net cash outflow from investing activities was HKD 174 million, and net cash inflow from financing activities was HKD 41 million, resulting in a net decrease of HKD 0.947 million in cash and cash equivalents Condensed Consolidated Statement of Cash Flows Summary | Activity Category | 1HFY2025 (Thousand HKD) | 1HFY2024 (Thousand HKD) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 131,710 | (422,256) | | Net Cash Flow from Investing Activities | (173,546) | 14,292 | | Net Cash Flow from Financing Activities | 40,889 | 382,787 | | Net Decrease in Cash and Cash Equivalents | (947) | (25,177) | | Cash and Cash Equivalents at End of Period | 1,865,021 | 1,813,216 | - In financing activities, proceeds from the issuance of medium-term notes amounted to HKD 2.678 billion, and proceeds from the issuance of perpetual capital instruments were HKD 758 million, while HKD 807 million of perpetual capital instruments were repaid[248] Notes to Interim Condensed Consolidated Financial Information This section provides detailed notes to the interim condensed consolidated financial information, covering company information, accounting policies, operating segments, revenue, other income, finance costs, profit before tax, income tax, dividends, earnings per share, contract assets, trade and other receivables, other financial assets, cash and cash equivalents, trade and other payables, share capital, perpetual capital instruments, commitments, related party transactions, fair value of financial instruments, subsequent events, comparative figures, and authorization for issue Corporate Information (Notes) The company is a limited company incorporated in Bermuda, dual-listed on the SGX and HKEX main boards, primarily engaged in investment holding, with its subsidiaries mainly involved in China's water environment management business, and its ultimate controlling entity being China Investment Corporation - The company is a limited company incorporated in Bermuda and is dual-listed on the main boards of the Singapore Exchange Securities Trading Limited and The Stock Exchange of Hong Kong Limited[255][258] - The company's subsidiaries are primarily involved in China's water environment management business, and its ultimate controlling entity is China Investment Corporation[256][257][258] Summary of Material Accounting Policies The interim financial information is prepared in accordance with IAS 34, with accounting policies consistent with the 2024 annual financial statements, and the adoption of new and amended IFRS effective January 1, 2025, had no material impact on results or financial position - The unaudited interim financial information has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" issued by the International Accounting Standards Board[261][265] - The adoption of the amended IAS 21 "Lack of Exchangeability" had no material impact on the preparation and presentation of the results and financial position for the current or prior accounting periods[271][274] Operating Segment Information The company operates in a single business segment, water environment management, which includes municipal wastewater treatment, industrial wastewater treatment, and water supply, with revenue and non-current assets primarily located in mainland China, and local government agencies as its main customers - The company operates in a single business segment, water environment management, which includes municipal wastewater treatment, industrial wastewater treatment, water supply, reclaimed water reuse, sludge treatment and disposal, sponge city construction, river basin management, livestock and poultry waste resource utilization, and water environment technology research and development and engineering construction[279][280][282] Revenue from External Customers (by Geographical Location) | Geographical Location | 1HFY2025 (Thousand HKD) | 1HFY2024 (Thousand HKD) | | :--- | :--- | :--- | | Mainland China | 3,276,626 | 3,339,163 | | Germany | 2,939 | 13,432 | | Total | 3,279,565 | 3,352,595 | - The main customers are local government agencies[291] Revenue (Notes) In 1HFY2025, the company's total revenue was HKD 3.28 billion, with an increase in operating revenue but a decrease in construction service revenue and equipment sales and technical service revenue, while finance income from service concession arrangements slightly decreased Revenue Composition (1HFY2025) | Revenue Source | 1HFY2025 (Thousand HKD) | 1HFY2024 (Thousand HKD) | | :--- | :--- | :--- | | Construction Service Revenue | 1,164,178 | 1,355,412 | | Operating Revenue | 1,476,891 | 1,301,259 | | Equipment Sales and Technical Service Revenue | 79,684 | 131,597 | | Finance Income from Service Concession Arrangements | 558,812 | 564,327 | | Total Revenue | 3,279,565 | 3,352,595 | - Total construction service revenue, finance income, and operating revenue from service concession arrangements with local government agencies in China amounted to HKD 3,121,222,000[294] [Other Income and Gains, Net](index=81&type=se