康达环保(06136) - 2025 - 中期业绩

Executive Summary Summary of Interim Results Announcement Kangda International Environmental Protection Co., Ltd. announced its unaudited interim results for the six months ended June 30, 2025, with revenue up 4.6%, gross profit margin at 50.3%, and record operating cash flow, despite a 4.7% decline in net profit attributable to owners due to disposal losses and impairment, with no interim dividend recommended Key Financial Highlights | Metric | June 30, 2025 (RMB million) | June 30, 2024 (RMB million) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,166.5 | 1,115.5 | +4.6% | | Gross Profit | 587.3 | 544.5 | +7.9% | | Gross Profit Margin | 50.3% | 48.8% | +1.5 percentage points | | Finance Costs | 232.7 | 274.2 | -15.1% | | Profit Attributable to Owners of the Parent | 103.4 | 108.6 | -4.7% | | Basic Earnings Per Share | 4.83 cents | 5.08 cents | -4.9% | | Net Cash Inflow from Operating Activities | 394.2 | 160.9 | +145.0% | - Revenue growth was primarily driven by an increase in construction service revenue[4] - The increase in gross profit margin was mainly attributable to effective cost-saving measures[4] - The decrease in finance costs was primarily due to lower benchmark interest rates and a reduction in the average loan balance[4] - The decline in net profit attributable to owners was mainly impacted by a one-off loss and impairment of approximately RMB 67.5 million from the disposal of subsidiaries[4] - Net cash inflow from operating activities reached a record interim high since the Group's listing in 2014[4] - The Board does not recommend an interim dividend for the six months ended June 30, 2025[4] Financial Statements Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, the company's revenue increased by 4.6% to RMB 1,166.5 million, gross profit grew by 7.9% to RMB 587.3 million, and gross profit margin improved to 50.3%, while net profit attributable to owners decreased by 4.7% to RMB 103.4 million due to disposal losses and impairment, despite a 15.1% reduction in finance costs Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric (RMB thousand) | June 30, 2025 (Unaudited) | June 30, 2024 (Unaudited) | | :--- | :--- | :--- | | Revenue | 1,166,493 | 1,115,511 | | Cost of sales | (579,227) | (571,040) | | Gross profit | 587,266 | 544,471 | | Other income and gains | 38,097 | 38,387 | | Selling and distribution expenses | (693) | (476) | | Administrative expenses | (121,716) | (132,844) | | Other expenses | (97,033) | (20,440) | | Finance costs | (232,687) | (274,221) | | Profit before tax | 169,989 | 153,297 | | Income tax expense | (62,594) | (47,198) | | Profit for the period | 107,395 | 106,099 | | Profit attributable to owners of the parent | 103,441 | 108,597 | | Non-controlling interests | 3,954 | (2,498) | | Basic earnings per share (RMB cents) | 4.83 | 5.08 | | Diluted earnings per share (RMB cents) | 4.81 | 5.08 | - Total other comprehensive income for the period was RMB 111,645 thousand, primarily comprising fair value changes of equity investments designated at fair value through other comprehensive income[7] Interim Condensed Consolidated Statement of Financial Position As of June 30, 2025, the company's total assets slightly increased, with total non-current assets reaching RMB 12,139.7 million and total current assets reaching RMB 7,014.3 million, while total current and non-current liabilities slightly reduced, leading to an increase in net assets to RMB 6,130.2 million, reflecting a sound financial position Interim Condensed Consolidated Statement of Financial Position | Metric (RMB thousand) | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | ASSETS | | | | Total non-current assets | 12,139,651 | 11,909,214 | | Total current assets | 7,014,275 | 7,145,789 | | LIABILITIES | | | | Total current liabilities | 5,164,337 | 5,302,629 | | Total non-current liabilities | 7,760,504 | 7,831,452 | | EQUITY | | | | Net assets | 6,130,162 | 6,019,845 | | Total equity | 6,130,162 | 6,019,845 | - Financial receivables (non-current portion) increased from RMB 9,631,996 thousand as of December 31, 2024, to RMB 9,688,655 thousand as of June 30, 2025[9] - Contract assets (non-current portion) increased from RMB 242,455 thousand as of December 31, 2024, to RMB 492,730 thousand as of June 30, 2025[9] - Interest-bearing bank and other borrowings (current portion) increased from RMB 2,961,204 thousand as of December 31, 2024, to RMB 3,057,445 thousand as of June 30, 2025[10] Notes to the Financial Statements Company and Group Information Kangda International Environmental Protection Co., Ltd. was incorporated in the Cayman Islands and listed on the Hong Kong Stock Exchange in 2014, primarily engaging in the design, construction, operation, and maintenance of various water and wastewater treatment facilities and other municipal infrastructure in mainland China - The company was incorporated in the Cayman Islands and listed on the Main Board of the Hong Kong Stock Exchange on July 4, 2014[11] - Its principal activities include the design, construction, operation, and maintenance of wastewater treatment plants, reclaimed water treatment plants, water supply plants, sludge treatment plants, and other municipal infrastructure[12] Basis of Preparation and Changes in Accounting Policies The interim condensed consolidated financial information is prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the Hong Kong Stock Exchange Listing Rules, presented under the historical cost convention, except for equity investments designated at fair value through other comprehensive income, with no significant impact from newly adopted revised IFRS this period - The financial information is prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the Hong Kong Stock Exchange Listing Rules[13] - The financial information is prepared on a historical cost basis, presented in RMB, with all values rounded to the nearest thousand[14] - Amendments to IAS 21 'Lack of Exchangeability' had no impact on the Group's interim condensed consolidated financial information, as both the Group's transaction and functional currencies are exchangeable[16] Operating Segment Information The Group's operating segments include urban water services, integrated water environment management, and rural wastewater treatment, with urban water services being the primary revenue source and contributor to segment results, while integrated water environment management revenue grew and rural wastewater treatment revenue declined, and management allocates resources and assesses performance based on each segment's results - The Group's operating segments include urban water services, integrated water environment management, and rural wastewater treatment[19] Segment Revenue for the Six Months Ended June 30, 2025 (RMB thousand) | Segment | Revenue | | :--- | :--- | | Urban Water Services | 1,136,702 | | Integrated Water Environment Management | 15,749 | | Rural Wastewater Treatment | 14,042 | | Total | 1,166,493 | Segment Results for the Six Months Ended June 30, 2025 (RMB thousand) | Segment | Results | | :--- | :--- | | Urban Water Services | 275,909 | | Integrated Water Environment Management | 13,078 | | Rural Wastewater Treatment | (6,440) | | Total | 282,547 | - The urban water services segment's total assets amounted to RMB 16,664,933 thousand, and total liabilities amounted to RMB 12,160,792 thousand[21] Revenue For the six months ended June 30, 2025, the Group's total revenue was RMB 1,166.5 million, primarily comprising operating service revenue and construction service revenue, with construction service revenue significantly increasing while financial income from service concession arrangements slightly decreased Revenue by Category (RMB thousand) | Revenue Category | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Operating service revenue | 664,516 | 642,667 | | Construction service revenue | 143,189 | 100,177 | | Financial income from service concession arrangements | 358,788 | 372,667 | | Total | 1,166,493 | 1,115,511 | - Construction service revenue increased by 43.0% year-on-year, operating service revenue increased by 3.4% year-on-year, and financial income from service concession arrangements decreased by 3.7% year-on-year[24] - All revenue is recognized over time and generated entirely within mainland China[24][25] Other Income and Gains For the six months ended June 30, 2025, total other income and gains amounted to RMB 38.1 million, largely consistent with the prior year, with key components including government grants, interest income from loans to third parties/associates/joint ventures, and other non-operating income Other Income and Gains (RMB thousand) | Category | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Government grants | 27,456 | 7,271 | | Interest income from loans to third parties | 5,385 | 8,704 | | Interest income from loans to joint ventures and associates | 988 | 985 | | Bank interest income | 462 | 1,137 | | Rental income less depreciation of investment properties | 290 | 267 | | Investment income | – | 1,432 | | Others | 3,542 | 18,565 | | Total | 38,097 | 38,387 | - Government grants primarily refer to VAT refunds and environmental protection funds, with some environmental protection funds recognized as deferred income[26] Finance Costs For the six months ended June 30, 2025, finance costs were RMB 232.7 million, a significant year-on-year decrease of 15.1%, primarily due to a reduction in interest on interest-bearing bank and other borrowings Finance Costs (RMB thousand) | Category | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Interest on interest-bearing bank and other borrowings | 232,657 | 274,161 | | Interest on lease liabilities | 30 | 60 | | Total | 232,687 | 274,221 | - The decrease in finance costs was mainly due to lower benchmark interest rates and a reduction in the average balance of interest-bearing bank and other borrowings[4][62] Profit Before Tax For the six months ended June 30, 2025, profit before tax was RMB 169.99 million, derived after deducting operating service costs, construction service costs, depreciation and amortization, losses from disposal of subsidiaries, and various impairment losses Components of Profit Before Tax (RMB thousand) | Category | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Operating service costs | 466,385 | 491,910 | | Construction service costs | 112,842 | 79,130 | | Total cost of sales | 579,227 | 571,040 | | Depreciation of property, plant and equipment | 2,428 | 2,665 | | Depreciation of investment properties | 309 | 309 | | Depreciation of right-of-use assets | 205 | 524 | | Amortization of intangible assets—concession rights | 55,459 | 64,178 | | Amortization of other intangible assets | 160 | 173 | | Loss on disposal of subsidiaries | 20,656 | – | | Impairment of financial receivables | 57,053 | 118 | | Impairment of trade receivables | 15,522 | 14,785 | | Exchange differences, net | 268 | 2,358 | - Loss on disposal of subsidiaries was RMB 20,656 thousand, which was the main reason for the significant increase in other expenses during the period[28][61] - Impairment of financial receivables significantly increased to RMB 57,053 thousand[28] Income Tax Expense For the six months ended June 30, 2025, total income tax expense was RMB 62.6 million, with an effective tax rate of approximately 37%, an increase of 6 percentage points from the prior year, primarily due to the combined impact of increased influence from lower tax rates enacted by specific provinces or local government authorities, increased impact from non-deductible expenses, and tax losses Income Tax Expense (RMB thousand) | Category | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Current — Mainland China | 30,757 | 20,242 | | Deferred | 31,837 | 26,956 | | Income tax expense for the period | 62,594 | 47,198 | - The Group had no assessable profits in Hong Kong, thus no provision for Hong Kong profits tax was made[29] - The increase in the effective tax rate was mainly due to the combined impact of increased influence from lower tax rates, increased impact from non-deductible expenses, and tax losses[64] Earnings Per Share For the six months ended June 30, 2025, basic earnings per share were RMB 4.83 cents, and diluted earnings per share were RMB 4.81 cents, both lower than the prior year, with calculations based on profit attributable to ordinary equity holders of the parent and the weighted average number of ordinary shares outstanding during the period Earnings Per Share (RMB thousand/share) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Profit attributable to ordinary equity holders of the parent | 103,441 | 108,597 | | Weighted average number of ordinary shares outstanding during the period for basic and diluted EPS calculation | 2,139,735,000 | 2,139,735,000 | | Dilutive effect—share options | – | 8,613,703 | | Total (diluted shares) | 2,139,735,000 | 2,148,348,703 | - Both basic and diluted earnings per share decreased due to the decline in net profit attributable to owners of the parent[4][5] Financial Receivables As of June 30, 2025, total financial receivables amounted to RMB 11,681.9 million, a slight increase from the end of 2024, primarily arising from service concession arrangements, with most pledged as collateral for borrowings Financial Receivables (RMB thousand) | Category | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Receivables from service concession arrangements | 11,685,716 | 11,677,750 | | Impairment | (3,769) | (3,769) | | Total | 11,681,947 | 11,673,981 | | Portion classified as current assets | (1,993,292) | (2,041,985) | | Non-current portion | 9,688,655 | 9,631,996 | - Financial receivables primarily consist of amounts due from PRC government authorities, with no collateral or credit enhancement products[35] - As of June 30, 2025, RMB 7,907.3 million of financial receivables were pledged as collateral for borrowings[36] Trade Receivables As of June 30, 2025, total trade receivables amounted to RMB 3,335.8 million, an increase from the end of 2024, with the largest portion aged over 12 months, reflecting a longer collection cycle for some amounts Trade Receivables Ageing Analysis (RMB thousand) | Ageing | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Within 3 months | 530,805 | 503,937 | | 4 to 6 months | 428,710 | 380,334 | | 7 to 12 months | 585,175 | 669,303 | | Over 12 months | 1,782,177 | 1,624,998 | | Total | 3,335,751 | 3,169,688 | - Trade receivables are non-interest bearing, and credit terms are considered on a case-by-case basis[37] Trade Payables and Bills Payable As of June 30, 2025, total trade payables and bills payable amounted to RMB 1,859.7 million, largely consistent with the end of 2024, with the largest portion aged over 12 months, indicating the presence of long-term payables Trade Payables and Bills Payable Ageing Analysis (RMB thousand) | Ageing | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Within 3 months | 408,704 | 313,775 | | 4 to 6 months | 186,121 | 83,862 | | 7 to 12 months | 229,738 | 257,212 | | Over 12 months | 1,035,167 | 1,194,871 | | Total | 1,859,730 | 1,849,720 | | Portion classified as current liabilities | (1,859,541) | (1,849,716) | | Non-current portion | 189 | 4 | - Trade payables and bills payable are non-interest bearing, and credit terms are determined on a case-by-case basis[38] Dividends The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[39] Management Discussion and Analysis Industry Overview In the first half of 2025, Kangda International Environmental Protection adopted a prudent operating approach, enhancing profitability through energy saving, disposal of inefficient projects, and leveraging the downward interest rate cycle, resulting in revenue growth, improved gross profit margin and operating cash flow, despite a decrease in net profit attributable to owners due to one-off losses from project disposals, with the company's financial structure remaining robust and the current ratio reaching a new high in recent years - The company enhanced its profitability through energy saving, disposal of inefficient projects, and reduction of finance costs[40] - Total revenue increased by 4.6% to RMB 1,166.5 million, and gross profit margin improved by 1.5 percentage points to 50.3%[41] - Finance costs significantly decreased by 15.1% to RMB 232.7 million, with an average borrowing interest rate of 4.85%, a year-on-year decrease of 0.68 percentage points[41][42] - Net profit attributable to owners decreased by 4.7% to RMB 103.4 million, primarily impacted by one-off losses and provisions related to project disposals[41] - Net operating cash inflow was RMB 394.2 million, marking a record interim high since the company's listing[42] - Long-term borrowings accounted for 68.1% of total borrowings, and the current ratio reached 1.38, its best level since 2016[42] Development Strategies and Future Outlook Supported by national ecological environment policies, the Group will continue to deepen its presence in urban water services, enhancing profitability through upgrading standards, negotiating wastewater treatment price adjustments, vigorously collecting receivables, and seeking local government buybacks of inefficient projects, with future development focusing on urban water services and selective investment in value-added areas across the water industry value chain - National policies support technological innovation in the ecological environment sector and the construction of a Beautiful China, promoting the healthy development of the wastewater treatment industry[43] - The Group will enhance the profitability of existing projects through upgrading standards, expansion, and seeking reasonable adjustments to wastewater treatment prices[44] - The Group will vigorously collect receivables and actively seek buybacks of inefficient projects by local governments or government-related enterprises to reduce financial burdens[44] - Future development will continue to focus on urban water services, which generate stable cash flow, while selectively investing in value-added areas across the upstream and downstream water industry value chain[46] - As of June 30, 2025, the Group had 104 operating service concession arrangement projects, with an operating treatment capacity exceeding 4 million tons per day[45] Business Segment Performance The Group's business primarily focuses on urban water services, supplemented by integrated water environment management and rural wastewater treatment, with urban water services projects and treatment capacity continuing to grow, leading to increased operating revenue, while integrated water environment management revenue increased and rural wastewater treatment project revenue decreased due to reduced construction work Urban Water Services As of June 30, 2025, the Group had entered into 107 service concession arrangement projects, including 101 wastewater treatment plants, with a total operating capacity of 4,059,500 tons/day and an annual utilization rate of approximately 81%, resulting in a 5% year-on-year increase in total operating revenue from urban water services due to more upgraded projects in operation, and a 51% year-on-year increase in construction revenue driven by new upgrading projects - As of June 30, 2025, the Group had entered into 107 service concession arrangement projects, including 101 wastewater treatment plants, 1 water supply plant, 3 sludge treatment plants, and 2 reclaimed water treatment plants[47][48] Urban Water Services Project Treatment Capacity (tons/day) | Category | In operation | Not yet commenced operation/not yet handed over | Total | | :--- | :--- | :--- | :--- | | Wastewater treatment | 4,059,500 | 80,500 | 4,140,000 | | Water supply | – | 30,000 | 30,000 | | Reclaimed water treatment | 65,000 | – | 65,000 | | Sludge treatment | 550 | – | 550 | | Total | 4,125,050 | 110,500 | 4,235,550 | - For the six months ended June 30, 2025, the actual total treatment volume was 595.0 million tons, a year-on-year decrease of 5% (2024: 624.1 million tons)[50] - The actual average water treatment fee was approximately RMB 1.63 per ton (2024: approximately RMB 1.60 per ton)[50] - Total operating revenue from urban water services was RMB 649.8 million, an increase of approximately 5% year-on-year, mainly due to an increase in operating projects with upgraded standards[51] - Construction revenue was RMB 133.7 million, an increase of approximately 51% year-on-year, primarily due to increased construction work for new upgrading projects[53] Integrated Water Environment Management The Group continued to execute existing integrated water environment management projects, focusing on risk reduction and achieving reasonable profits, with total revenue from this segment reaching RMB 15.7 million for the six months ended June 30, 2025, an increase of approximately 14% year-on-year, primarily benefiting from the execution of newly signed EPC projects - The Group has 5 integrated water environment management projects under construction, primarily located in Jiangxi Province and Henan Province[54] - Total revenue was RMB 15.7 million, an increase of approximately 14% year-on-year (2024: RMB 13.8 million), mainly due to the execution of newly signed EPC projects[54] Rural Wastewater Treatment For the six months ended June 30, 2025, the Group had 2 rural wastewater treatment projects in Guangdong Province, with total revenue from this segment at RMB 14.0 million, a year-on-year decrease of approximately 42%, primarily due to reduced construction service revenue, partially offset by increased operating revenue from projects in operation - The Group has 2 rural wastewater treatment projects located in Guangdong Province[55] - Total revenue was RMB 14.0 million, a year-on-year decrease of approximately 42% (2024: RMB 24.1 million)[55] - The decrease in revenue was mainly due to the net effect of reduced construction service revenue and increased operating revenue from projects in operation[55] Financial Performance Analysis During the reporting period, the Group achieved growth in both revenue and gross profit, with an improved gross profit margin, reflecting the effectiveness of cost control measures, while finance costs significantly decreased, but net profit was pressured by losses from the disposal of subsidiaries, and income tax expense increased, with the effective tax rate rising Revenue For the six months ended June 30, 2025, the Group's revenue was RMB 1,166.5 million, an increase of approximately 5% year-on-year, primarily driven by increased construction and operating revenue, partially offset by a decrease in financial income from service concession arrangements - The increase in revenue was mainly due to an increase of RMB 43.0 million in construction revenue and RMB 21.9 million in operating revenue[56] - Financial income from service concession arrangements decreased by RMB 13.9 million, primarily due to a reduction in financial assets[56] Cost of Sales For the six months ended June 30, 2025, cost of sales was RMB 579.2 million, a slight increase, with the rise in construction costs consistent with the growth in construction revenue, while operating costs decreased due to reduced total treatment volume and energy-saving measures - Cost of sales slightly increased by RMB 8.2 million, with construction costs increasing by RMB 33.7 million and operating costs decreasing by RMB 25.5 million[57] - The decrease in operating costs was mainly due to a reduction in actual total treatment volume and the implementation of various energy-saving measures[57] Gross Profit Margin For the six months ended June 30, 2025, the Group's gross profit margin was approximately 50%, an increase of 1 percentage point from the prior year, primarily benefiting from an improved operating gross profit margin - Gross profit margin increased by 1 percentage point to 50%, mainly due to an improvement in operating gross profit margin during the period[58] Other Income and Gains For the six months ended June 30, 2025, other income and gains amounted to RMB 38.1 million, largely consistent with the prior year, primarily including government grants, loan interest income, and other non-operating income - This primarily includes government grants of RMB 27.5 million, loan interest income of RMB 6.4 million, and other non-operating income of RMB 3.5 million[59] Administrative Expenses For the six months ended June 30, 2025, administrative expenses were RMB 121.7 million, a year-on-year decrease of approximately 8%, primarily due to reduced professional fees - Administrative expenses decreased by approximately 8%, mainly due to a reduction in professional fees[60] Other Expenses For the six months ended June 30, 2025, other expenses were RMB 97.0 million, a significant year-on-year increase, primarily due to increased losses from the disposal of subsidiaries, non-operating expenses, and impairment losses, partially offset by reduced exchange losses - Other expenses significantly increased, mainly due to increased losses from the disposal of subsidiaries, non-operating expenses, and impairment losses[61] Finance Costs For the six months ended June 30, 2025, finance costs were RMB 232.7 million, a year-on-year decrease of approximately 15%, primarily due to lower benchmark interest rates and a reduction in the average balance of interest-bearing bank and other borrowings - Finance costs decreased by approximately 15%, mainly due to lower benchmark interest rates and a reduction in the average balance of interest-bearing bank and other borrowings[62] - The average borrowing interest rate was 4.85%, a decrease of 0.68 percentage points from the prior year[62] Share of Profits and Losses of Associates For the six months ended June 30, 2025, the Group's share of losses of associates was RMB 0.8 million, a shift from profit in the prior year, and the Group will implement measures to reduce these losses - Share of losses of associates was RMB 0.8 million (2024: profit of RMB 0.1 million)[63] Income Tax Expense For the six months ended June 30, 2025, income tax expense was RMB 62.6 million, with an effective tax rate of approximately 37%, an increase of 6 percentage points from the prior year, primarily influenced by a combination of multiple factors - Income tax expense included current PRC income tax of RMB 30.8 million and deferred tax expense of RMB 31.8 million[64] - The increase in the effective tax rate was mainly due to the combined impact of increased influence from lower tax rates enacted by specific provinces or local government authorities, increased impact from non-deductible expenses, and tax losses[64] Balance Sheet Item Analysis The Group's balance sheet items showed structural changes during the reporting period, with financial receivables and trade receivables increasing, while contract assets and prepayments, other receivables, and other assets decreased, and cash and cash equivalents significantly increased, reflecting improved operating cash flow, while trade payables and bills payable slightly increased, and other payables and accrued expenses decreased Financial Receivables As of June 30, 2025, financial receivables amounted to RMB 11,681.9 million, a slight increase, primarily due to the reclassification of contract assets to financial receivables after the completion of water treatment project construction and upgrading cycles, partially offset by transfers to assets held for sale and intangible assets - Financial receivables increased by RMB 7.9 million to RMB 11,681.9 million[65] - The increase was mainly due to the reclassification of contract assets to financial receivables[65] Contract Assets As of June 30, 2025, contract assets amounted to RMB 320.0 million, a decrease of RMB 225.8 million, primarily due to the reclassification of contract assets to financial receivables and the net effect of increased construction from BOT, PPP, and EPC contract projects Contract Assets (RMB thousand) | Category | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Contract assets | 320,008 | 545,787 | | Portion classified as current | (77,553) | (53,057) | | Non-current portion | 242,455 | 492,730 | - Contract assets decreased by RMB 225.8 million, mainly due to the reclassification of contract assets to financial receivables[66] Trade Receivables As of June 30, 2025, trade receivables amounted to RMB 3,335.8 million, an increase of RMB 166.1 million, primarily arising from construction and operating services for urban water, integrated water environment management, and rural wastewater treatment projects - Trade receivables increased by RMB 166.1 million, mainly due to an increase of approximately RMB 220.8 million in receivables from urban water services projects[67] - Receivables from integrated water environment management projects saw a net increase of approximately RMB 12.9 million[67] Prepayments, Other Receivables and Other Assets As of June 30, 2025, prepayments, other receivables, and other assets amounted to RMB 775.3 million, a decrease of RMB 4.1 million, primarily due to a reduction in other operating receivables - A decrease of RMB 4.1 million, mainly due to a reduction of approximately RMB 5.1 million in other operating receivables[68] Cash and Cash Equivalents As of June 30, 2025, cash and cash equivalents amounted to RMB 236.5 million, an increase of RMB 59.4 million from the end of the prior year, primarily attributable to increased cash inflow from operating activities Cash Flow Statement Summary (RMB thousand) | Category | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net cash flows from operating activities | 394,172 | 160,900 | | Net cash flows (used in)/from investing activities | (74,235) | 178,816 | | Net cash flows used in financing activities | (260,488) | (287,630) | | Net increase in cash and cash equivalents | 59,449 | 52,086 | | Cash and cash equivalents at end of period | 236,504 | 300,245 | - The increase in cash and cash equivalents was mainly due to increased cash inflow from operating activities[69] - If investments in BOT/TOT and PPP businesses were not classified as cash flows used in operating activities, the Group would have generated cash inflows of RMB 475.4 million and RMB 254.6 million, respectively[70] Trade Payables and Bills Payable As of June 30, 2025, trade payables and bills payable amounted to RMB 1,859.7 million, a slight increase, consistent with the execution and settlement of construction projects undertaken by the Group - Trade payables and bills payable increased by RMB 10.0 million to RMB 1,859.7 million[71] Other Payables and Accrued Expenses As of June 30, 2025, other payables and accrued expenses amounted to RMB 96.3 million, a decrease of RMB 45.7 million, primarily due to reductions in acquisition payables, salaries and welfare payables, and advances for equity and other operating payables - Other payables and accrued expenses decreased by RMB 45.7 million to RMB 96.3 million[72] Liquidity and Financial Resources The Group's liquidity and capital requirements are primarily related to project investments, operation and maintenance, working capital, and general corporate purposes, with cash and cash equivalents increasing, total interest-bearing debt decreasing, and the gearing ratio declining as of June 30, 2025, indicating continuous improvement in financial position - Cash and cash equivalents increased by RMB 59.4 million to RMB 236.5 million[74] - Total interest-bearing debt decreased to RMB 9,584.7 million (December 31, 2024: RMB 9,854.0 million)[75] - 68.1% of interest-bearing debt was long-term debt, with over 66% bearing interest at floating rates[75] - Bank credit facilities amounted to RMB 9,732.4 million, of which RMB 2,230.0 million remained unutilized[75] - The gearing ratio decreased to 67.8% (2024: 69.2%)[76] Pledge of Assets As of June 30, 2025, approximately RMB 9,584.7 million of the Group's interest-bearing bank and other borrowings were secured by financial receivables, intangible assets, investment properties, trade receivables, equity, contract assets, and pledged deposits totaling RMB 11,078.9 million - Interest-bearing borrowings were secured by financial receivables, intangible assets—concession rights, investment properties, trade receivables, equity in an investment company, contract assets, and pledged deposits[77] - The total value of pledged assets was RMB 11,078.9 million[77] Employees and Remuneration Policies As of June 30, 2025, the Group employed 2,242 staff, with remuneration policies determined with reference to market conditions and individual performance, reviewed annually, and training programs provided, and a defined contribution scheme adopted as its pension plan - As of June 30, 2025, the Group employed 2,242 staff[78] - The remuneration package is determined with reference to market conditions and individual performance, and reviewed annually[78] - The Group provides external and internal training programs for its employees and has adopted a defined contribution scheme[78] Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[79] Foreign Exchange Risk The majority of the Group's operations are in China, with transactions denominated and settled in RMB, and except for bank deposits denominated in foreign currencies and certain interest-bearing bank borrowings, the Group has no significant foreign currency risk and currently does not use derivative financial instruments for hedging - The majority of operations are conducted in China, with transactions denominated and settled in RMB[80] - Except for bank deposits denominated in foreign currencies and certain interest-bearing bank borrowings, there is no significant foreign currency risk[80] - Currently, no derivative financial instruments are used to hedge foreign currency risk[80] Events After Reporting Period Except as disclosed, no significant events have occurred after June 30, 2025 - No significant events have occurred after June 30, 2025[81] Corporate Governance and Other Information Compliance with Corporate Governance Code The Company has adopted and complied with the code provisions of the Corporate Governance Code set out in Appendix C1 of the Stock Exchange Listing Rules, with the Board believing that for the six months ended June 30, 2025, the company has complied with all code provisions and is committed to continuously improving management efficiency and transparency - The Company has adopted and complied with the code provisions of the Corporate Governance Code set out in Appendix C1 of the Stock Exchange Listing Rules[82] - For the six months ended June 30, 2025, the company has complied with the Corporate Governance Code without any deviation[82] - The Group strengthened budget, risk, performance, and accountability management, optimized management tools and strategies, and enhanced operational efficiency[83] Interim Dividends The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025[84] Audit Committee and Review of Interim Results The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025, and discussed accounting policies, practices, and internal control matters with senior management, with the committee comprising three independent non-executive directors - The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025[85] - The committee comprises Mr. Zhou Jinrong (Chairman), Mr. Chang Qing, and Mr. Peng Yongzhen, all independent non-executive directors[85] Standard Code for Securities Transactions by Directors The Company has adopted the Standard Code set out in Appendix C3 of the Listing Rules as the code of conduct for directors' dealings in the Company's securities, and all directors have confirmed compliance with this code during the reporting period - The Company has adopted the Standard Code set out in Appendix C3 of the Listing Rules as the code of conduct for directors' dealings in the Company's securities[86] - All directors have confirmed compliance with the Standard Code for the six months ended June 30, 2025[86] Purchase, Sale and Redemption of the Company's Listed Securities For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[87] Publication of Interim Results Announcement and Interim Report This interim results announcement has been published on the Stock Exchange website and the Company's website, and the interim report will be dispatched to the Company's shareholders in due course - This interim results announcement has been published on the Stock Exchange website (www.hkexnews.hk) and the Company's website (www.kangdaep.com)[88](index=88&type=chunk) - The interim report will be dispatched to the Company's shareholders in due course[88] Board of Directors Information As of the announcement date, the Board of Directors comprises eight directors, including four executive directors, one non-executive director, and three independent non-executive directors - The Board includes eight directors: Mr. Li Zhong, Ms. Liu Yujie, Mr. Duan Linnan, and Mr. Zhou Wei (Executive Directors), Mr. Zhao Junxian (Non-executive Director), and Mr. Zhou Jinrong, Mr. Chang Qing, and Mr. Peng Yongzhen (Independent Non-executive Directors)[90]