博奇环保(02377) - 2023 - 中期业绩

Financial and Operational Summary Financial and Operational Overview During the reporting period, the Group achieved significant growth in revenue and gross profit, with a substantial increase in net profit and an improvement in net profit margin | Metric | Amount (RMB Million) | Year-on-Year Growth | | :--- | :--- | :--- | | Revenue | 1,001 | 38.8% | | Gross Profit | 202 | 41.3% | | Net Profit (excluding fair value change losses and investment income) | 131 | 79.5% | | Net Profit Margin (excluding fair value change losses and investment income) | 13.1% | 3.0 percentage points | | Net Profit | 136 | N/A | | Net Profit Margin | 13.6% | N/A | Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income During the reporting period, the company's revenue and gross profit grew significantly, with profit for the period surging from RMB 3,045 thousand to RMB 135,908 thousand, and basic and diluted earnings per share increasing from RMB 0.00 to RMB 0.13 | Metric | For the six months ended June 30, 2023 (RMB Thousand) | For the six months ended June 30, 2022 (RMB Thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue | 1,000,686 | 721,070 | +38.8% | | Gross Profit | 202,105 | 143,222 | +41.1% | | Profit Before Tax | 145,511 | 9,340 | +1458.0% | | Profit for the Period | 135,908 | 3,045 | +4350.0% | | Profit for the Period Attributable to Owners of the Parent | 133,733 | 3,533 | +3686.0% | | Basic Earnings Per Share (RMB) | 0.13 | 0.00 | N/A | | Diluted Earnings Per Share (RMB) | 0.13 | 0.00 | N/A | Condensed Consolidated Statement of Financial Position As of June 30, 2023, the company's total assets and liabilities, net current assets, and equity attributable to owners of the parent all increased, indicating a robust financial position | Metric | June 30, 2023 (RMB Thousand) | December 31, 2022 (RMB Thousand) | Change | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 2,086,601 | 2,086,193 | +0.02% | | Total Current Assets | 2,656,676 | 2,639,111 | +0.66% | | Total Current Liabilities | 1,649,603 | 1,732,520 | -4.96% | | Total Non-current Liabilities | 96,374 | 143,856 | -33.00% | | Equity Attributable to Owners of the Parent | 2,968,823 | 2,834,503 | +4.74% | | Total Equity | 2,997,300 | 2,848,928 | +5.21% | - As of June 30, 2023, net current assets were RMB 1,007,073 thousand, an increase from RMB 906,591 thousand as of December 31, 2022[8] Condensed Consolidated Statement of Changes in Equity During the reporting period, equity attributable to owners of the parent increased due to profit for the period and acquisition of subsidiaries' non-controlling interests, with total equity rising from RMB 2,848,928 thousand at the beginning of the year to RMB 2,997,300 thousand | Metric | January 1, 2023 (RMB Thousand) | June 30, 2023 (RMB Thousand) | | :--- | :--- | :--- | | Equity Attributable to Owners of the Parent at Beginning of Period | 2,834,503 | N/A | | Profit for the Period | 133,733 | N/A | | Transfer to Statutory Surplus Reserve | 10,394 | N/A | | Share-based Payments | 587 | N/A | | Acquisition of Subsidiaries (Non-controlling Interests) | N/A | 11,877 | | Equity Attributable to Owners of the Parent at End of Period | N/A | 2,968,823 | - As of June 30, 2023, non-controlling interests were RMB 28,477 thousand, a significant increase from RMB 14,425 thousand as of January 1, 2023, primarily due to the acquisition of subsidiaries[34] Condensed Consolidated Statement of Cash Flows During the reporting period, cash outflow from operating activities increased, investment activities shifted from net inflow to net outflow, and cash outflow from financing activities significantly rose, leading to a substantial decrease in cash and cash equivalents at period-end | Metric | For the six months ended June 30, 2023 (RMB Thousand) | For the six months ended June 30, 2022 (RMB Thousand) | Change | | :--- | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (105,966) | (72,723) | Increased Outflow 33,243 | | Net Cash (Used in)/Generated from Investing Activities | (25,100) | 53,041 | Decreased Inflow 78,141 (shifted to outflow) | | Net Cash Used in Financing Activities | (50,399) | (1,104) | Increased Outflow 49,295 | | Net Decrease in Cash and Cash Equivalents | (181,465) | (20,786) | Increased Outflow 160,679 | | Cash and Cash Equivalents at End of Period | 224,215 | 324,727 | Decrease 100,512 | Notes to the Condensed Consolidated Financial Statements Basis of Preparation and Principal Accounting Policies The condensed consolidated financial statements are prepared in accordance with IAS 34 and HKEX Listing Rules, using the historical cost convention, and the application of new and revised IFRSs had no material impact on current and prior period disclosures - The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 and the applicable disclosure requirements of Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[38] - The condensed consolidated financial statements are prepared on the historical cost basis, except for certain properties and financial instruments measured at revalued amounts or fair value where applicable[39] - The application of new and revised International Financial Reporting Standards in the current period had no material impact on the disclosures in the Group's interim and prior year financial statements[14] Revenue and Segment Information The Group's revenue primarily derives from four business segments: flue gas treatment, water treatment, hazardous and solid waste treatment, and dual-carbon new energy+, with significant overall revenue growth and the fastest growth in dual-carbon new energy+ - The Group primarily generates revenue through four business segments: flue gas treatment, water treatment, hazardous and solid waste treatment, and dual-carbon new energy+[72][45] | Metric | For the six months ended June 30, 2023 (RMB Thousand) | For the six months ended June 30, 2022 (RMB Thousand) | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Total Revenue | 1,000,686 | 721,070 | 38.8% | | Business Segment | For the six months ended June 30, 2023 (RMB Thousand) | For the six months ended June 30, 2022 (RMB Thousand) | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Flue Gas Treatment Business | 780,256 | 616,407 | 26.6% | | Water Treatment Business | 162,432 | 90,115 | 80.2% | | Hazardous and Solid Waste Treatment Business | 13,766 | 4,625 | 197.6% | | Dual-Carbon New Energy+ Business | 44,232 | 9,923 | 345.8% | - The vast majority of revenue (RMB 994,583 thousand) is recognized over time, with a small portion (RMB 6,103 thousand) recognized at a point in time[21][47] Other Income and Gains and Other Expenses and Losses During the reporting period, the Group's other income and gains and other expenses and losses shifted from a loss to a gain, primarily due to increased government grants and improved gains from financial asset disposals | Item | For the six months ended June 30, 2023 (RMB Thousand) | For the six months ended June 30, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Interest Income | 4,058 | 6,394 | | Government Grants | 10,992 | 1,165 | | Foreign Exchange Gains | 4,355 | 5,381 | | Gains/(Losses) on Disposal of Equity Investments at Fair Value Through Profit or Loss | 5,046 | (61,361) | | Gains on Disposal of Property, Plant and Equipment | 3,728 | – | | Total | 27,795 | (57,254) | - Total other income and gains significantly improved year-on-year, primarily due to increased government grants and higher investment gains from financial assets measured at fair value through profit or loss[253] Finance Costs During the reporting period, the Group's finance costs decreased, mainly due to the repayment of bank and other borrowings | Metric | For the six months ended June 30, 2023 (RMB Thousand) | For the six months ended June 30, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Total Finance Costs | 6,584 | 9,190 | - Finance costs primarily include interest on bank borrowings, interest on lease liabilities, and discounting of bills receivable[53] - The decrease in finance costs was mainly due to the repayment of borrowings by the Group during the reporting period[282] Income Tax Expense During the reporting period, the Group's income tax expense significantly increased due to higher profit before tax, though some Chinese subsidiaries enjoyed preferential tax rates or exemptions due to high-tech enterprise certification or environmental projects | Metric | For the six months ended June 30, 2023 (RMB Thousand) | For the six months ended June 30, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Total Income Tax Expense | 9,603 | 6,295 | - The increase in income tax expense was primarily due to the increase in the Group's profit before tax during the reporting period[258] - Several Chinese subsidiaries (e.g., Hejin Boqi, Puzhou Boqi, Huainan Boqi, Changji Prefecture Boqi, Jiangsu Boqi, Handan Boqi, Beijing Boqi, Jinggangshan Boqi, Changzhi Boqi, Laibin Boqi, Qinghai Boqi) enjoy a preferential tax rate of 15% or income tax exemption due to high-tech enterprise certification or environmental projects[56][57][58][59][61][87][82][83][84][85][86] - Chinese entities are subject to a 10% withholding tax on dividends distributed to overseas investors from profits generated since January 1, 2008[62] Profit for the Period During the reporting period, the Group's profit for the period significantly increased, primarily driven by higher business revenue and gross profit, as well as reduced expenses and increased government grants - For the six months ended June 30, 2023, the Group's profit for the period was RMB 136 million, an increase of RMB 133 million from RMB 3 million in the same period of 2022[259] - The growth in profit for the period was primarily due to: (i) increased business revenue and gross profit across various segments following the relaxation of COVID-19 control measures and policies; and (ii) a slight decrease in expenses and an increase in government grants compared to the prior year[259] | Metric | For the six months ended June 30, 2023 (RMB Thousand) | For the six months ended June 30, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Total Staff Costs | 125,838 | 124,418 | | Research and Development Expenses | 23,557 | 16,966 | Dividends The company declared a final dividend of HKD 0.03 per share for 2022 but decided not to declare or pay an interim dividend for 2023 - The company declared a final dividend of HKD 0.03 per share for the year ended December 31, 2022, which remained unpaid before the end of the reporting period[63] - The company's directors determined that no interim dividend would be declared or paid for 2023[63] Earnings Per Share During the reporting period, both basic and diluted earnings per share attributable to owners of the company significantly increased, reflecting a substantial improvement in the company's profitability - Basic earnings per share was RMB 0.13 (2022: RMB 0.00), and diluted earnings per share was RMB 0.13 (2022: RMB 0.00)[6] | Metric | For the six months ended June 30, 2023 (RMB Thousand) | For the six months ended June 30, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Profit for Calculating Earnings Per Share (Profit for the Period Attributable to Owners of the Company) - Basic and Diluted | 133,733 | 3,533 | | Metric | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 | | :--- | :--- | :--- | | Weighted Average Number of Ordinary Shares for Basic Earnings Per Share | 996,668,799 | 996,690,125 | | Weighted Average Number of Ordinary Shares for Diluted Earnings Per Share | 1,000,114,840 | 1,000,672,632 | Receivables under Service Concession Arrangements At the end of the reporting period, total receivables under service concession arrangements slightly decreased, with the non-current portion accounting for the largest share | Metric | June 30, 2023 (RMB Thousand) | December 31, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Current Portion | 46,418 | 49,762 | | Non-current Portion | 471,993 | 492,005 | | Total | 518,411 | 541,767 | | Expected Collection Period | June 30, 2023 (RMB Thousand) | | :--- | :--- | | Within one year | 46,418 | | Over one year but not exceeding two years | 45,041 | | Over two years but not exceeding five years | 152,820 | | Over five years | 274,132 | Contract Assets and Contract Liabilities During the reporting period, the Group's contract assets significantly increased while contract liabilities substantially decreased, reflecting good project progress and collection performance | Metric | June 30, 2023 (RMB Thousand) | December 31, 2022 (RMB Thousand) | Change | | :--- | :--- | :--- | :--- | | Contract Assets | 579,912 | 437,440 | +32.6% | | Contract Liabilities | (44,288) | (109,009) | -59.4% | - Contract assets include RMB 566,784 thousand current and RMB 13,128 thousand non-current; contract liabilities are all current at RMB 44,288 thousand[69] - Contract assets arise when the Group has a right to consideration for services completed but has not yet billed under the relevant contract, and the right is conditional on factors other than the passage of time[95] Trade Receivables At the end of the reporting period, total trade receivables increased, with a corresponding rise in impairment provisions, as the company assesses recoverability | Metric | June 30, 2023 (RMB Thousand) | December 31, 2022 (RMB Thousand) | Change | | :--- | :--- | :--- | :--- | | Trade Receivables | 962,571 | 918,149 | +4.8% | | Less: Impairment Provision for Bad Debts | (55,553) | (46,028) | +20.7% | | Net Amount | 907,018 | 872,121 | +4.0% | | Aging | June 30, 2023 (RMB Thousand) | December 31, 2022 (RMB Thousand) | | :--- | :--- | :--- | | 1 to 90 days | 325,245 | 420,120 | | 91 to 180 days | 163,563 | 110,363 | | 181 to 365 days | 150,082 | 74,948 | | 1 to 2 years | 177,985 | 203,426 | | 2 to 3 years | 78,361 | 45,089 | | Over 3 years | 11,782 | 18,175 | - The Group generally grants customer credit terms ranging from 30 to 90 days, with extended credit terms granted at discretion[114] Trade Payables and Bills Payable At the end of the reporting period, total trade payables and bills payable slightly increased, with payables less than 90 days accounting for the largest portion | Metric | June 30, 2023 (RMB Thousand) | December 31, 2022 (RMB Thousand) | Change | | :--- | :--- | :--- | :--- | | Trade Payables | 898,515 | 846,746 | +6.1% | | Bills Payable | 247,028 | 287,494 | -14.0% | | Total | 1,145,543 | 1,134,240 | +1.0% | | Aging | June 30, 2023 (RMB Thousand) | December 31, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Less than 90 days | 514,457 | 409,766 | | 91 to 180 days | 91,009 | 265,540 | | 181 to 365 days | 182,931 | 115,173 | | 1 to 2 years | 198,478 | 172,004 | | 2 to 3 years | 55,156 | 57,154 | | Over 3 years | 103,512 | 114,603 | - Credit terms for the purchase of goods and services are generally 30 to 90 days[71] Share Capital During the reporting period, the company's share capital remained stable, with no changes in the number of issued ordinary shares or par value per share - The number of issued ordinary shares is 1,005,720,799.00, with a par value of USD 0.00001 per share[98] - Share capital is presented as RMB 67 thousand, with no change for the six months ended June 30, 2023[98] Share Option Scheme The company adopted a share option scheme in 2020 to reward contributors; no new options were granted during the period, but some lapsed due to unfulfilled vesting conditions, and share-based payment expenses were recognized - The company adopted a share option scheme on December 29, 2020, with a ten-year validity, aiming to grant options to eligible participants as rewards or incentives[99] - For the six months ended June 30, 2023, the company did not grant any options[119] | Metric | January 1 to June 30, 2023 (Unaudited) | January 1 to June 30, 2022 (Unaudited) | | :--- | :--- | :--- | | Beginning of Period | 12,470,000 | 14,220,000 | | Granted during Period | – | – | | Forfeited during Period | (500,000) | (750,000) | | End of Period | 11,970,000 | 13,470,000 | - For the six months ended June 30, 2023, share-based payment expenses of RMB 587 thousand were recognized (2022: RMB 2,496 thousand)[102] Business Combinations The Group acquired a 51% equity interest in Jiangsu Boqi Smart Energy Co Ltd during the reporting period for new energy business expansion, recognizing corresponding goodwill and contingent consideration - On May 12, 2023, the Group acquired a 51% equity interest in Jiangsu Boqi Smart Energy Co Ltd ('Jiangsu Boqi') for a total consideration of RMB 12,441 thousand, aiming to accelerate its new energy business expansion[151] | Item | RMB Thousand (Unaudited) | | :--- | :--- | | Cash | 11,260 | | Contingent Consideration Arrangement | 1,500 | | Put Option | (319) | | Purchase Consideration at Fair Value | 12,441 | - The acquisition resulted in goodwill of RMB 79 thousand and recognition of contingent consideration of RMB 1,500 thousand, contingent on Jiangsu Boqi's profit before tax within 3 years post-acquisition[130][133] - Since the acquisition, Jiangsu Boqi contributed RMB 1,077 thousand to the Group's revenue and RMB 305 thousand to consolidated profit for the six months ended June 30, 2023[134] Related Party Transactions and Balances The Group has receivables, payables, and transactions with several related parties, primarily involving O&M services, EPC services, and procurement, with changes in some related party relationships disclosed | Metric | June 30, 2023 (RMB Thousand) | December 31, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Total Amounts Due from Related Parties | 382,014 | 370,670 | | Total Amounts Due to Related Parties | 41,603 | 7,249 | | Related Party | June 30, 2023 (RMB Thousand) | June 30, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Yangxi Power - O&M Service Revenue | 98,622 | 53,746 | | Yangxi Power - Purchase of Utilities, Labor, etc | 32,632 | 20,465 | | Shouyang Thermal Power - EPC Service Revenue | 36,393 | – | - Shouyang Thermal Power is no longer a related person under the Listing Rules due to equity changes, but remains a related party of the Group under IAS 24[162] Capital Commitments At the end of the reporting period, the Group's contracted but unprovided capital commitments primarily related to property, plant, and machinery | Item | June 30, 2023 (RMB Thousand) | December 31, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Contracted but not provided for: Property, Plant and Machinery | 16,071 | 19,656 | Events After the Reporting Period No significant events requiring adjustment or disclosure under IFRS occurred after the reporting period - Except as disclosed in this interim results announcement, the Group had no material events after the reporting period requiring disclosure[145][313] Management Discussion and Analysis Industry Overview China's environmental protection industry has entered a deep policy implementation era, focusing on 'carbon reduction' to promote synergistic pollution and carbon reduction, with policies strengthening cross-departmental supervision and encouraging technological innovation - China's environmental protection industry has transitioned from a policy seeding era to a comprehensive policy deep-cultivation era, with increasingly完善 policy regulations covering water, soil, air, and solid waste treatment[147] - During the '14th Five-Year Plan' period, the strategic focus is on carbon reduction, promoting synergistic pollution and carbon reduction to achieve comprehensive green transformation of economic and social development[147] - Multiple policies have been introduced, including guidelines on deepening cross-departmental comprehensive supervision, notices on industrial energy conservation supervision for 2023, calls for major environmental protection technologies and equipment for 2023, and draft opinions on ultra-low emissions in the cement and coking industries, strengthening supervision, encouraging innovation, and expanding markets[148][171][149][172] Business Review During the reporting period, the Group actively expanded traditional and new business areas, making progress in flue gas treatment, water treatment, hazardous and solid waste treatment, and dual-carbon new energy+, achieving breakthroughs in the thermal power and photovoltaic sectors, driving both performance and revenue growth - Through active expansion and strategic deployment in both traditional and new business areas, the Group achieved double growth in performance and revenue[173] - The Group continues to advance and refine its lean management efforts, allocating internal resources, and continuously improving and formulating multi-level, phased high-incentive schemes across various business segments to motivate teams[174] - As of June 30, 2023, the Group's projects have a wide coverage across 31 provinces, municipalities, and autonomous regions in China, while also actively expanding overseas operations[202] Flue Gas Treatment Business Flue gas treatment business provides services through EPC, O&M, and concession models; during the reporting period, EPC business secured new contracts of approximately RMB 259 million, O&M projects operated stably, and concession projects continued, providing a steady growth source for the Group - The Group's flue gas treatment business primarily provides services through various models, including EPC, Operation and Maintenance (O&M), and Concession (including 'Build-Operate-Transfer' or BOT, and 'Build-Own-Operate' or BOO)[177] - The Group seized the current 'large thermal power' development opportunities in China, continuously expanded its thermal power market, won the bid for the Guoxin Binhai Port 2x1000MW unit desulfurization EPC project, and steadily expanded into non-power sectors such as steel and cement industries[177] EPC EPC business provides flue gas emission control and dust removal services to industrial clients; during the reporting period, 7 new EPC contracts totaling approximately RMB 259 million were secured, including the Guoxin Binhai Port 2x1000MW unit desulfurization EPC project - The EPC business primarily involves providing design, equipment and material procurement, project construction, and equipment installation services for sulfur dioxide, nitrogen oxide emission control, and dust removal projects for industrial clients in power generation, steel, chemical, refining, and building materials sectors[177] - During the reporting period, the Group secured 7 new EPC contracts, with a total contract value of approximately RMB 259 million[177] - Key projects include the Jiangsu Guoxin Binhai Port Power Generation Co Ltd 2×1000MW new desulfurization EPC project[177][208] Operation and Maintenance (O&M) O&M services include the operation and maintenance of desulfurization, denitrification, and dust removal facilities; as of June 30, 2023, the Group had 25 operational O&M projects covering thermal power and steel industries, providing continuous revenue and stable cash flow - O&M services primarily include providing operational and routine maintenance services for clients' desulfurization, denitrification, and dust removal facilities[209] - O&M business revenue provides the Group with a continuous revenue stream and stable cash flow, with charging models based on total grid-connected electricity, sintered ore tonnage, or pre-agreed prices[209] - As of June 30, 2023, the Group had 25 operational O&M projects, covering thermal power, steel, and other industrial sectors, with all projects operating stably and meeting emission standards[179] Concession Concession business includes desulfurization, denitrification, and eco-island projects; as of June 30, 2023, the Group was executing 7 concession projects, all operational except for the Shanxi Puzhou Phase I BOT project, laying a foundation for continuous operations - Under the concession business model, the Group is responsible for fundraising, investment, construction, and operation of projects in accordance with concession contracts signed with its clients[212] - As of June 30, 2023, the Group had a total of 7 concession projects under execution, with all projects successfully operational except for the Shanxi Puzhou Phase I BOT project[184] - The Shanxi Puzhou Phase I BOT project is in the owner buyback negotiation phase, and related BOT operations have been suspended[187] Water Treatment Business During the reporting period, the Group had 10 operational water treatment projects, all running stably, and is actively expanding and strategically positioning itself in this business area - As of June 30, 2023, the Group had 10 operational water treatment projects, all running stably with good business development momentum[215] - The Group is actively expanding and strategically positioning itself in the water treatment business sector[215] Hazardous and Solid Waste Treatment Business The Group made progress in hazardous and solid waste treatment, with the Sinopec Xinjiang drilling mud project operating smoothly, Tangshan Yandong cement kiln co-processing project Phase I completed, Qinghai Boqi center operating stably, and new projects under construction - The Group's Sinopec Xinjiang Work Area drilling mud solid waste treatment O&M project is operating smoothly[189] - Phase I of the Tangshan Yandong cement kiln co-processing hazardous and solid waste treatment project has been completed and is currently applying for a hazardous waste operating license[189] - The Qinghai Boqi Hazardous and Solid Waste Treatment Center is operating stably, with resource recovery projects for waste packaging and waste photovoltaic panels under construction, expected to commence operation sequentially by year-end and next year[189] Dual-Carbon New Energy+ Business The Group vigorously advanced its new energy+ business, winning the Zhejiang Post distributed photovoltaic EPC project, acquiring 7 distributed photovoltaic project assets totaling 21MW, and successfully operating the Tianjin Tiechang dry quenching waste heat power generation concession project, bringing stable revenue - In April 2023, the Group won the bid for the Zhejiang Post distributed photovoltaic EPC general contracting project, with a provisional installed capacity of 300MW, not less than 150MW[218] - In May 2023, the Group acquired 7 distributed photovoltaic project assets with a total installed capacity of approximately 21MW, marking a significant step in its 'new energy+' business segment[218] - The Tianjin Tiechang dry quenching waste heat power generation concession project is operating smoothly, expected to bring stable revenue to the Group in the medium to long term[218] Financial Position and Operating Results During the reporting period, the Group maintained a sound financial position with significant growth in revenue and net profit, improved gross profit margin, but increased cash outflow from operating activities, a shift from net inflow to net outflow in investing activities, and a substantial reduction in capital expenditure - The Group achieved favorable overall production and operation results, with significant year-on-year growth in revenue and net profit, and a sound asset structure[219] - In the first half of 2023, following the relaxation of COVID-19 control measures and policies, the domestic economy grew steadily, the company's existing projects proceeded with production and operation in an orderly manner, and new market areas were continuously developed, actively fostering new businesses[219] Revenue During the reporting period, the Group's total revenue increased by 38.8% year-on-year, primarily due to orderly progress of existing orders post-pandemic, increased O&M projects, and higher power generation, with all business segments showing growth, especially dual-carbon new energy+ and hazardous and solid waste treatment - For the six months ended June 30, 2023, the Group's total revenue was RMB 1,001 million, an increase of 38.8% from RMB 721 million in the first half of 2022[239] - Revenue growth was primarily due to: (i) orderly progress of existing orders following the relaxation of COVID-19 control measures and policies; (ii) an increase in the number of operational O&M projects compared to the prior year; and (iii) a year-on-year increase in power generation from some O&M and concession projects[239] | Business Segment | H1 2023 (RMB Million) | H1 2022 (RMB Million) | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Flue Gas Treatment Business - EPC | 301 | 196 | 53.6% | | Flue Gas Treatment Business - O&M | 237 | 158 | 50.0% | | Flue Gas Treatment Business - Concession | 236 | 248 | -4.8% | | Water Treatment Business | 163 | 90 | 81.1% | | Hazardous and Solid Waste Treatment Business | 14 | 5 | 180.0% | | Dual-Carbon New Energy+ Business | 44 | 10 | 340.0% | Cost of Sales and Services During the reporting period, the Group's cost of sales and services increased by 38.1% year-on-year, mainly due to increased existing orders and business scale post-pandemic, and higher power generation from some O&M and concession projects - For the six months ended June 30, 2023, the Group's cost of sales and services was RMB 798 million, an increase of 38.1% from RMB 578 million in the first half of 2022[222] - Cost growth was primarily due to: (i) orderly progress of existing orders and increased business scale following the relaxation of COVID-19 control measures and policies; and (ii) a year-on-year increase in power generation from some O&M and concession projects[222] | Business Segment | H1 2023 (RMB Million) | H1 2022 (RMB Million) | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Flue Gas Treatment Business - EPC | 287 | 184 | 56.0% | | Flue Gas Treatment Business - O&M | 174 | 130 | 33.8% | | Flue Gas Treatment Business - Concession | 167 | 190 | -12.1% | | Water Treatment Business | 132 | 59 | 123.7% | | Hazardous and Solid Waste Treatment Business | 9 | 7 | 28.6% | | Dual-Carbon New Energy+ Business | 29 | 8 | 262.5% | Gross Profit and Gross Profit Margin During the reporting period, the Group's gross profit increased by 41.3% year-on-year, and gross profit margin improved by 0.3 percentage points to 20.2%, primarily due to normal EPC project execution, increased O&M projects and power generation, and reduced costs post-pandemic - For the six months ended June 30, 2023, the Group's gross profit was RMB 202 million, an increase of 41.3% from RMB 143 million in the first half of 2022, with a gross profit margin of 20.2%, up 0.3 percentage points from the first half of 2022[224] - The year-on-year increase in gross profit was primarily due to: (i) normal and orderly execution of various EPC projects following the relaxation of COVID-19 control measures and policies; (ii) an increase in the number of operational O&M projects compared to the prior year; and (iii) increased power generation from some O&M and BOT projects, coupled with reduced costs[224] | Business Segment | H1 2023 Gross Profit (RMB Thousand) | H1 2023 Gross Profit Margin (%) | H1 2022 Gross Profit (RMB Thousand) | H1 2022 Gross Profit Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Flue Gas Treatment Business - EPC | 13,275 | 4.4 | 12,410 | 6.3 | | Flue Gas Treatment Business - O&M | 63,123 | 26.7 | 28,153 | 17.8 | | Flue Gas Treatment Business - Concession | 69,345 | 29.3 | 58,336 | 23.5 | | Water Treatment Business | 30,228 | 18.6 | 30,933 | 34.3 | | Hazardous and Solid Waste Treatment Business | 4,986 | 36.2 | (2,380) | (51.5) | | Dual-Carbon New Energy+ Business | 15,045 | 34.0 | 1,999 | 20.1 | | Total | 202,105 | 20.2 | 143,222 | 19.9 | Other Income and Gains and Other Expenses and Losses (Financial) During the reporting period, the Group's other income and gains and other expenses and losses shifted from a loss to a gain, primarily due to increased government grants and improved gains from financial asset investments - For the six months ended June 30, 2023, the Group's other income and gains and other expenses and losses resulted in a gain of RMB 28 million, an increase of RMB 85 million from a loss of RMB 57 million in the first half of 2022[253] - The increase in gains was primarily due to increased government grants and higher investment gains from financial assets measured at fair value through profit or loss[253] | Item | For the six months ended June 30, 2023 (RMB Thousand) | For the six months ended June 30, 2022 (RMB Thousand) | | :--- | :--- | :--- | | Interest Income | 4,058 | 6,394 | | Government Grants | 10,992 | 1,165 | | Foreign Exchange Gains | 4,355 | 5,381 | | Gains on Disposal of Equity Investments at Fair Value Through Profit or Loss | 5,046 | (61,361) | | Gains on Disposal of Property, Plant and Equipment | 3,728 | – | | Other | (218) | 326 | | Total | 27,795 | (57,254) | Selling and Distribution Expenses During the reporting period, the Group's selling and distribution expenses increased, mainly due to higher market expansion costs post-pandemic - For the six months ended June 30, 2023, the Group's selling and distribution expenses were RMB 11 million, an increase of RMB 4 million from RMB 7 million in the first half of 2022[280] - The increase was primarily due to higher market expansion costs following the relaxation of COVID-19 control measures and policies[280] Administrative Expenses During the reporting period, the Group's administrative expenses decreased, mainly due to reduced intangible asset amortization and lower expense amortization from partial option unlocking - For the six months ended June 30, 2023, the Group's administrative expenses were RMB 42 million, a decrease of RMB 6 million from RMB 48 million in the first half of 2022[230] - The ratio of administrative expenses to revenue decreased from 6.7% in the prior year to 4.2%[230] - The decrease was primarily due to: (i) reduced intangible asset amortization influenced by a downward adjustment in the total valuation of Qinghai Boqi's equity transaction; and (ii) reduced expense amortization from partial option unlocking[230] Research and Development ("R&D") Expenses During the reporting period, the Group's R&D expenses increased, mainly due to greater investment in new business expansion, but the R&D expense to revenue ratio remained consistent with the prior year - For the six months ended June 30, 2023, the Group's R&D expenses were RMB 24 million, an increase of RMB 7 million from RMB 17 million in the first half of 2022[256] - The increase was primarily due to greater R&D investment for new business expansion, with the R&D expense to revenue ratio remaining flat at 2.4% compared to the prior year[256] Finance Costs (Financial) During the reporting period, the Group's finance costs decreased, mainly due to loan repayments - For the six months ended June 30, 2023, the Group's finance costs were RMB 7 million, a decrease of RMB 2 million from RMB 9 million in the first half of 2022[282] - The decrease was primarily due to the repayment of borrowings by the Group during the reporting period[282] Income Tax Expense (Financial) During the reporting period, the Group's income tax expense significantly increased due to higher profit before tax - For the six months ended June 30, 2023, the Group's income tax expense was RMB 10 million, an increase of 66.7% from RMB 6 million in the first half of 2022[258] - The increase was primarily due to the increase in the Group's profit before tax during the reporting period[258] Profit for the Period During the reporting period, the Group's profit for the period significantly increased, primarily driven by higher business revenue and gross profit across various segments, reduced expenses, and increased government grants - For the six months ended June 30, 2023, the Group's profit for the period was RMB 136 million, an increase of RMB 133 million from RMB 3 million in the first half of 2022[259] - The growth was primarily due to: (i) increased business revenue and gross profit across various segments following the relaxation of COVID-19 control measures and policies; and (ii) a slight decrease in expenses and an increase in government grants compared to the prior year[259] Profit Attributable to Owners of the Parent During the reporting period, profit attributable to owners of the parent significantly increased, reflecting a substantial improvement in the company's overall profitability - For the six months ended June 30, 2023, profit attributable to owners of the parent was RMB 134 million, an increase of RMB 130 million from RMB 4 million in the first half of 2022[285] Cash Flows During the reporting period, cash outflow from operating activities increased, investing activities shifted from net inflow to net outflow, and financing activities saw a significant increase in outflow, leading to a substantial decrease in bank balances and cash - Net cash used in operating activities was RMB 106 million, a year-on-year increase in outflow of RMB 33 million, primarily due to increased phased operating procurement expenditures for new energy projects[286] - Net cash used in investing activities was RMB 25 million, compared to a net cash generated from investing activities of RMB 53 million in the prior year, a year-on-year decrease of RMB 78 million, mainly due to reduced gains from disposal of financial assets at fair value through profit or loss[234] - Net cash used in financing activities was RMB 50 million, a year-on-year increase in outflow of RMB 49 million, mainly due to the repayment of bank and other borrowings and interest[262] - As of June 30, 2023, the Group's bank balances and cash were RMB 224 million, a decrease of RMB 178 million from RMB 402 million at the beginning of 2023, primarily due to advance payments for some EPC projects as per contractual agreements during the reporting period[261] Capital Expenditure During the reporting period, the Group's total capital expenditure significantly decreased, primarily comprising investments in property, plant, and equipment, and equity investments - In the first half of 2023, the Group's total capital expenditure was RMB 17 million, a decrease of RMB 121 million from RMB 138 million in the prior year[288] - The Group's capital expenditure primarily includes investments in the acquisition and construction of projects and equity investments[288] Pledged Assets Some of the Group's long-term bank borrowings are secured by property, and equity interests in subsidiaries and service fee receivables are pledged to secure liabilities under finance lease agreements - As of June 30, 2023, the Group's long-term bank borrowings of RMB 28 million were secured by properties owned by the Group[289] - The entire equity interests in the company's subsidiaries, Jiangxi Jinggangshan Boqi Environmental Protection Technology Co Ltd and Handan Boqi Environmental Protection Technology Co Ltd, and service fee receivables under service concession agreements, are pledged to CITIC Financial Leasing Co Ltd and Jiangsu Financial Leasing Co Ltd, respectively, to secure liabilities under finance lease agreements[263][290] Contingent Liabilities As of June 30, 2023, the Group had no significant contingent liabilities - As of June 30, 2023, the Group had no significant contingent liabilities[291] Material Investments Held, Material Acquisitions and Disposals During the reporting period, the Group disposed of shares in China Xuyang Group Co Ltd and acquired a 51% equity interest in Wuxi Huadong No 1 Smart Energy Co Ltd to accelerate its new energy business expansion - From April 27, 2022, to February 21, 2023, the company disposed of a total of 19,619,000 shares in China Xuyang Group Co Ltd for a total consideration of approximately HKD 75.48 million, after which the Group no longer held any Xuyang shares[291] - On May 12, 2023, the company's wholly-owned subsidiary acquired a 51% equity interest in Wuxi Huadong No 1 Smart Energy Co Ltd for a total consideration of RMB 11.26 million, aiming to accelerate its new energy business expansion[292] - Except as disclosed above, the Group held no material investments and had no material acquisitions or disposals of subsidiaries and associates during the reporting period[265] No Material Changes Except as disclosed in this interim results announcement, no material changes affecting the Group's performance occurred during the reporting period - Except as disclosed in this interim results announcement, there were no material changes affecting the Group's performance requiring disclosure under paragraphs 32 and 40(2) of Appendix 16 of the Listing Rules during the reporting period[266] Future Plans for Material Investments and Capital Assets As of June 30, 2023, the Group had no other plans for material investments and capital assets but will continue to closely review its business expansion plans - As of June 30, 2023, the Group had no other plans for material investments and capital assets[267] - The Group will continue to closely and regularly review its business expansion plans to take necessary measures that align with the Group's best interests[267] Group's Future Outlook The Group will focus on 'environmental governance and dual-carbon new energy+' across three development channels—existing, emerging, and exploratory businesses—to form a 'gas, water, solid, dual-carbon new energy+' integrated development pattern, planning to increase R&D investment, refine management, and leverage capital markets for industrial transformation - The Group positions itself with two development channels: 'environmental governance and dual-carbon new energy+', focusing on advantageous industries and niche sectors, aiming to form a 'gas, water, solid, dual-carbon new energy+' integrated development pattern through three development channels—existing, emerging, and exploratory businesses—over five years[267] - Committed to becoming a highly competitive, domestic first-class 'environmental dual-carbon management platform, operation service technology platform, and capital operation investment and financing platform'[267] - Stabilize the flue gas treatment business to form a 'base plate'; increase resource investment in water treatment business and actively expand market share in hazardous and solid waste treatment business to form an 'alternative plate'; accelerate the promotion of new energy business to form a 'support plate'[268] - Adhere to innovation-driven development, increase R&D efforts, focus on new business areas, and enhance technological innovation capabilities through technical cooperation and independent R&D[269] - Continuously advance lean management, optimize human resource support, build a comprehensive intelligent management platform to improve management efficiency, and optimize organizational structure and staffing, strengthen internal control mechanisms, and attract high-end talent[295] - Leverage capital market forces to optimize industrial layout and achieve industrial transformation and upgrading through introducing strategic shareholder resources, investment and M&A, and multi-channel fundraising[296] Corporate Governance and Other Information Corporate Governance Code The company is committed to maintaining high corporate governance standards, adopting the Listing Rules' Corporate Governance Code; the dual role of Chairman and CEO Mr. Zeng Zhijun deviates from the code, but the board deems it appropriate due to his experience and independent board elements - The company has adopted the Corporate Governance Code set out in Appendix 14 of the Listing Rules and has complied with its provisions throughout the reporting period[271][298] - Mr. Zeng Zhijun's dual role as Chairman and Chief Executive Officer deviates from Code Provision C.2.1 of the Corporate Governance Code[297] - The Board believes that Mr. Zeng's extensive experience and the independent elements of the Board members (including two executive directors, three non-executive directors, and three independent non-executive directors) provide effective checks and balances on his power and authority, thus deeming the deviation from the Code appropriate and justifiable[297] Model Code for Securities Transactions The company adopted the Listing Rules' Model Code for Securities Transactions by Directors and confirmed strict compliance by all directors during the reporting period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules[299] - Following specific enquiries with all directors of the company, all directors confirmed their strict compliance with the required standards set out in the Model Code during the reporting period[299] - The Board has also adopted the Model Code to regulate all dealings in the company's securities by relevant employees who may possess unpublished inside information of the company[273] Directors' Responsibilities for Financial Statements Directors understand their responsibility to prepare financial statements that present a true and fair view, with management providing necessary information for informed board assessment - Directors understand their responsibility to prepare the financial statements for the first half of 2023 to present a true and fair view of the state of affairs of the company and the Group, as well as the Group's performance and cash flows[274] - The company's management provides the Board with necessary explanations and information, enabling the Board to conduct an informed assessment of the company's financial statements presented for approval[301] - The directors are unaware of any material uncertainties related to events or conditions that may cast significant doubt upon the company's ability to continue as a going concern[275] Purchase, Sale or Redemption of the Company's Listed Securities During the reporting period, neither the company nor any member of the Group purchased, sold, or redeemed any of the company's shares - During the reporting period, neither the company nor any member of the Group purchased, sold, or redeemed any of the company's shares[302] Sufficiency of Public Float From the listing date to the end of the reporting period, the company consistently maintained a sufficient public float - Based on information available to the company and to the best of the directors' knowledge, the company has consistently maintained a sufficient public float from March 16, 2018 (the date of listing of shares on the Stock Exchange) until June 30, 2023[309] Dividend Policy The company's dividend policy stipulates that the Board will consider paying annual dividends within a range of 30% to 50% of the net profit for each year - According to the company's Dividend Policy announced on May 18, 2018, the Board will consider paying annual dividends within a range of 30% to 50% of the net profit for each year[277][303] Interim Dividend The Board resolved not to declare an interim dividend for the six months ended June 30, 2023 - The Board resolved not to declare an interim dividend for the six months ended June 30, 2023 (2022: nil)[303] Compliance with Laws and Regulations During the reporting period, the Group strictly complied with business-related laws and regulations and was not involved in any significant legal proceedings - As an environmental service provider, the Group strictly complies with laws and regulations related to its business, including those concerning the provision of environmental protection and energy-saving services, and the monitoring of pollutants and flue gas from coal-fired power plants[278] - During the reporting period, the company complied with relevant laws and regulations that have a material impact on the company and was not involved in any significant legal proceedings[311] Environmental Policies and Performance The Group is committed to environmental protection, social contribution, and sustainable development, with details of its Environmental, Social and Governance Report disclosed in the 2022 Annual Report - The Group is committed to environmental protection, contributing to society, and achieving sustainable development[278] - Details regarding the company's Environmental, Social and Governance (ESG) are disclosed in the ESG Report within the company's 2022 Annual Report, published on April 26, 2023, in accordance with Listing Rule 13.91 and Appendix 27[305] Events After the Reporting Period (Corporate Governance) Except as disclosed in this interim results announcement, no material events requiring disclosure occurred after the reporting period - Except as disclosed in this interim results announcement, the Group had no material events after the reporting period requiring disclosure[313] Audit Committee and Review of Interim Results The Audit Committee reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2023, and discussed audit, internal control, risk management systems, and financial reporting matters - The company's Audit Committee has reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2023[27] - The Audit Committee has reviewed the accounting standards and practices adopted by the Group with management and has also discussed audit, internal control, risk management systems, and financial reporting matters[313] - The Audit Committee comprises two independent non-executive directors and one non-executive director[313] Publication of Interim Results and Interim Report This interim results announcement is published on the company's and HKEX websites, and the 2023 interim report containing all required information will be dispatched to shareholders and posted on these websites in due course - This announcement is published on the company's website (www.chinaboqi.com) and the Stock Exchange's website (www.hkexnews.hk)[306](index=306&type=chunk) - The 2023 interim report, containing all information required by the Listing Rules, will be dispatched to the company's shareholders and posted on the aforementioned websites for review in due course[306][314]