Financial and Operational Summary The company reported key financial metrics for the first half of 2023, showing revenue growth and increased comprehensive income, with no interim dividend proposed Key Financial Indicators for H1 2023 | Indicator | H1 2023 (RMB million) | YoY Change | | :--- | :--- | :--- | | Revenue | 2,499.2 | +7.8% | | Gross Profit | 517.2 | - | | Gross Margin | 20.7% | -0.2 percentage points | | Total Comprehensive Income Attributable to Owners of the Parent | 265.1 | +33.8% | - The Board did not recommend the distribution of an interim dividend for the six months ended June 30, 2023202 Interim Condensed Consolidated Financial Statements This section presents the interim condensed consolidated financial statements, including income, financial position, equity changes, and cash flows Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2023, the company's revenue increased by 7.8% to RMB 2,499.2 million, with gross profit at RMB 517.2 million and a slight decrease in gross margin, while profit for the period and profit attributable to owners of the parent both achieved significant growth Overview of Profit or Loss and Other Comprehensive Income | Indicator | H1 2023 (RMB thousand) | H1 2022 (RMB thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2,499,180 | 2,318,791 | +7.8 | | Cost of Sales | (1,982,023) | (1,834,623) | +8.0 | | Gross Profit | 517,157 | 484,168 | +6.8 | | Selling and Distribution Expenses | (9,809) | (6,300) | +55.7 | | Administrative Expenses | (162,174) | (159,294) | +1.8 | | Other Income and Losses | 67,234 | 35,466 | +89.5 | | Net Other Expenses | – | (4,275) | - | | Finance Costs | (89,082) | (103,090) | -13.6 | | Impairment Losses on Financial and Contract Assets, Net | (3,972) | (4,801) | -17.2 | | Profit Before Tax | 319,354 | 241,874 | +32.0 | | Income Tax Expense | (49,235) | (41,964) | +17.3 | | Profit for the Period | 270,119 | 199,910 | +35.1 | | Profit Attributable to Owners of the Parent | 266,220 | 197,038 | +35.1 | | Profit Attributable to Non-controlling Interests | 3,899 | 2,872 | +35.7 | | Basic and Diluted Earnings Per Share | RMB 0.09 | RMB 0.07 | +28.6 | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2023, the company's total assets slightly increased, and net current assets significantly rose, primarily due to increased trade receivables and reduced interest-bearing bank and other borrowings, leading to an improved net debt to capital ratio Overview of Financial Position | Indicator | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 7,252,379 | 7,410,661 | -2.1 | | Total Current Assets | 11,225,925 | 10,937,596 | +2.6 | | Total Current Liabilities | 8,786,108 | 10,533,347 | -16.5 | | Net Current Assets | 2,439,817 | 404,249 | +503.6 | | Total Non-current Liabilities | 2,675,788 | 918,161 | +191.4 | | Net Assets | 7,016,408 | 6,896,749 | +1.7 | | Total Equity | 7,016,408 | 6,896,749 | +1.7 | - As of June 30, 2023, the Group's net debt to capital ratio (net debt divided by the sum of net debt and total equity) was 39.71%, a decrease of 1.17 percentage points from 40.88% as of December 31, 202286 Interim Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2023, total equity attributable to owners of the parent increased to RMB 7,176,995 thousand, primarily driven by profit growth for the period, alongside the declaration of the 2022 final dividend Overview of Changes in Equity | Indicator | January 1, 2023 (Audited) (RMB thousand) | Profit for the Period (RMB thousand) | Other Comprehensive Loss for the Period (RMB thousand) | Final Dividend Declared for 2022 (RMB thousand) | June 30, 2023 (Unaudited) (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Attributable to Owners of the Parent | 7,060,361 | 266,220 | (1,111) | (148,475) | 7,176,995 | | Non-controlling Interests | (163,612) | 3,899 | (874) | – | (160,587) | | Total Equity | 6,896,749 | 270,119 | (1,985) | (148,475) | 7,016,408 | - In the first half of 2023, exchange differences related to overseas operations resulted in an other comprehensive loss of RMB 1,111 thousand187 Interim Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2023, net cash flow from operating activities significantly increased, cash outflow from investing activities rose, while cash outflow from financing activities substantially decreased, leading to a net increase in cash and cash equivalents at period-end Overview of Cash Flows | Indicator | H1 2023 (RMB thousand) | H1 2022 (RMB thousand) | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 384,924 | 276,587 | +39.1% | | Net Cash Flows Used in Investing Activities | (154,109) | (97,880) | +57.4% | | Net Cash Flows Used in Financing Activities | (10,821) | (451,612) | -97.6% | | Net Increase / (Decrease) in Cash and Cash Equivalents | 219,994 | (272,905) | - | | Cash and Cash Equivalents at End of Period | 1,092,443 | 972,286 | +12.4% | - Cash outflow from financing activities significantly decreased, primarily due to reduced repayments of bank and other borrowings189 Notes to the Interim Condensed Consolidated Financial Information This section provides detailed notes and explanations supporting the interim condensed consolidated financial statements Company and Group Information The company was established in China on July 25, 2011, listed on the Stock Exchange in 2016, and primarily engages in environmental facility concession operations, denitration catalyst production and sales, environmental facility engineering, water treatment, energy-saving engineering, and renewable energy engineering, with China Datang Corporation Ltd. as its direct and ultimate controlling company - The company was established in China on July 25, 2011, and listed on the Main Board of the Stock Exchange on November 15, 2016190 - The Group's principal activities include environmental facility concession operations, production and sales of denitration catalysts, environmental facility engineering, water treatment business, energy-saving engineering business, and renewable energy engineering business210 - The company's direct and ultimate controlling company is China Datang Corporation Ltd., which is wholly owned by the State-owned Assets Supervision and Administration Commission of the State Council191 Basis of Preparation and Changes in Accounting Policies and Disclosures These interim condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 and are consistent with the accounting policies of the 2022 annual consolidated financial statements, with no significant impact from newly adopted IFRS and IAS amendments during the period - These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'232 - The accounting policies and basis of preparation for these interim condensed consolidated financial statements are consistent with those used in the Group's annual consolidated financial statements for the year ended December 31, 2022195 - The adoption of new and revised International Financial Reporting Standards and International Accounting Standards had no significant impact on the unaudited condensed consolidated financial statements for the six months ended June 30, 2023234 Operating Segment Information The Group's operations are categorized into four segments: environmental protection and energy-saving solutions, renewable energy engineering, thermal power engineering, and other businesses, with management allocating resources and assessing performance based on segment results, and segment assets and liabilities determined by direct attribution or reasonable allocation - The Group's operating businesses are categorized by nature into environmental protection and energy-saving solutions, renewable energy engineering, thermal power engineering, and other businesses216237238239 H1 2023 Segment Revenue and Results | Segment | Revenue (RMB thousand) | Segment Results (RMB thousand) | | :--- | :--- | :--- | | Environmental Protection and Energy-Saving Solutions | 2,264,734 | 401,787 | | Renewable Energy Engineering | 222,774 | 11,168 | | Thermal Power Engineering | – | – | | Other Businesses | 24,348 | (22,135) | | Total | 2,511,856 | 390,820 | - Segment results are assessed based on adjusted profit before tax, excluding other income and losses, other expenses, finance costs unrelated to leases, and corporate and other unallocated expenses239 Segment Revenue Environmental protection and energy-saving solutions business is the primary revenue source, with significant growth in renewable energy engineering revenue, and total revenue aligns with the consolidated income statement after inter-segment eliminations H1 2023 Segment Revenue Details | Segment | Sales to External Customers (RMB thousand) | Inter-segment Sales (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | | Environmental Protection and Energy-Saving Solutions | 2,264,734 | – | 2,264,734 | | Renewable Energy Engineering | 222,774 | – | 222,774 | | Thermal Power Engineering | – | – | – | | Other Businesses | 11,672 | 12,676 | 24,348 | | Total | 2,499,180 | 12,676 | 2,511,856 | - External revenue from the renewable energy engineering business increased by 123.2% year-on-year, indicating strong growth in this segment102 Geographical Information and Major Customers The Group's principal operations and revenue are concentrated in mainland China, with significant related party transactions with China Datang Corporation Ltd. and its subsidiaries - Major non-current assets are located in mainland China, and major revenue is derived from mainland China, thus no further geographical segment information is presented244 - Revenue from sales of goods and services to China Datang and its subsidiaries was approximately RMB 2,138 million (H1 2022: approximately RMB 1,977 million)245 Revenue For the six months ended June 30, 2023, the Group's revenue was RMB 2,499,180 thousand, primarily from desulfurization and denitration services and construction services, with significant growth in construction service revenue Revenue by Type of Goods or Services | Type of Goods or Services | H1 2023 (RMB thousand) | H1 2022 (RMB thousand) | | :--- | :--- | :--- | | Sales of Industrial Products | 147,035 | 187,760 | | Construction Services | 426,436 | 238,680 | | Desulfurization and Denitration Services | 1,925,709 | 1,892,351 | | Total | 2,499,180 | 2,318,791 | - Construction service revenue increased from RMB 238,680 thousand in H1 2022 to RMB 426,436 thousand in H1 2023224 - Revenue recognition primarily occurs for services transferred over time (RMB 2,352,145 thousand), followed by goods transferred at a point in time (RMB 147,035 thousand)224 Other Income and Losses For the six months ended June 30, 2023, the Group's total other income and losses amounted to RMB 67,234 thousand, a significant increase from the prior period, primarily driven by higher government grants Details of Other Income and Losses | Item | H1 2023 (RMB thousand) | H1 2022 (RMB thousand) | | :--- | :--- | :--- | | Interest Income | 3,434 | 4,760 | | Government Grants | 53,722 | 24,866 | | Gain on Disposal of Property, Plant and Equipment Items | 2,945 | – | | Compensation Income | 1,301 | – | | Investment Income | 977 | – | | Exchange Gain | 4,855 | 5,999 | | Other Losses, Net | – | (159) | | Total | 67,234 | 35,466 | - Government grants significantly increased from RMB 24,866 thousand in H1 2022 to RMB 53,722 thousand in H1 20233 Finance Costs For the six months ended June 30, 2023, the Group's finance costs were RMB 89,082 thousand, a decrease from the prior period, primarily due to a reduction in the annual interest rate on borrowings Details of Finance Costs | Item | H1 2023 (RMB thousand) | H1 2022 (RMB thousand) | | :--- | :--- | :--- | | Interest Expense on Lease Liabilities | 5,480 | 6,061 | | Interest Expense on Bank and Other Borrowings | 83,961 | 97,029 | | Less: Capitalized Interest | (359) | – | | Total | 89,082 | 103,090 | - Finance costs decreased by 13.6% year-on-year, primarily due to a reduction in the annual interest rate on borrowings during the current period compared to the same period last year164 Income Tax Expense For the six months ended June 30, 2023, the Group's income tax expense was RMB 49,235 thousand, an increase from the prior period, primarily contributed by current income tax Details of Income Tax Expense | Item | H1 2023 (RMB thousand) | H1 2022 (RMB thousand) | | :--- | :--- | :--- | | Current Income Tax | 50,642 | 41,600 | | Deferred Income Tax | (1,407) | 364 | | Total | 49,235 | 41,964 | - Income tax expense increased by 17.1% to RMB 49.2 million from RMB 42.0 million in the same period of 202299 Dividends The Board did not recommend an interim dividend for the six months ended June 30, 2023, while the 2022 final dividend of RMB 148,475,000 was approved at the shareholders' meeting on June 29, 2023 - The Board did not recommend the distribution of any interim dividend for the six months ended June 30, 2023144256 - The final dividend for the year ended December 31, 2022, of RMB 0.05 per share (pre-tax), amounting to RMB 148,475,000, was approved at the shareholders' meeting on June 29, 2023284 Earnings Per Share Attributable to Ordinary Equity Holders of the Parent For the six months ended June 30, 2023, basic and diluted earnings per share increased to RMB 0.09 from RMB 0.07 in the prior period, primarily due to higher profit attributable to ordinary equity holders of the parent Earnings Per Share Calculation | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Profit Attributable to Ordinary Equity Holders of the Parent (RMB thousand) | 266,220 | 197,038 | | Weighted Average Number of Ordinary Shares in Issue (shares) | 2,967,542,000 | 2,967,542,000 | | Basic / Diluted Earnings Per Share | RMB 0.09 | RMB 0.07 | - The company had no potential dilutive ordinary shares in issue, thus the diluted earnings per share amount is the same as the basic earnings per share amount8 Property, Plant and Equipment For the six months ended June 30, 2023, the Group's expenditures on purchases of property, plant and equipment items increased, and gains were recognized from the disposal of related items - For the six months ended June 30, 2023, the Group purchased property, plant and equipment items at a cost of RMB 61,819,000, an increase from RMB 44,047,000 in the prior period259 - The carrying amount of property, plant and equipment items disposed of by the Group was RMB 2,669,000, resulting in a gain on disposal of RMB 2,945,0009 Trade Receivables, Bills Receivable and Contract Assets As of June 30, 2023, the Group's total trade receivables, bills receivable, and contract assets amounted to RMB 9,302,348 thousand, a slight increase from the end of 2022, with contract assets showing significant growth Details of Trade Receivables, Bills Receivable and Contract Assets | Item | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Trade Receivables (Net) | 8,364,459 | 8,367,950 | | Bills Receivable | 524,041 | 610,254 | | Contract Assets (Net) | 413,848 | 183,725 | | Total | 9,302,348 | 9,161,929 | - Contract assets increased from RMB 183,725 thousand as of December 31, 2022, to RMB 413,848 thousand as of June 30, 2023, primarily originating from construction services260 - Trade receivables are non-interest bearing, and the Group exercises strict control over outstanding receivables to mitigate credit risk10 Prepayments, Other Receivables and Other Assets As of June 30, 2023, the Group's total prepayments, other receivables, and other assets amounted to RMB 578,937 thousand, a decrease from the end of 2022 Details of Prepayments, Other Receivables and Other Assets | Item | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Prepayments | 168,092 | 221,600 | | Deposits | 44,468 | 40,390 | | Other Receivables | 81,877 | 104,854 | | Other Current Assets | 286,923 | 292,824 | | Less: Impairment Allowance | (2,423) | (2,423) | | Total | 578,937 | 657,245 | Cash and Cash Equivalents and Restricted Cash As of June 30, 2023, the Group's cash and cash equivalents amounted to RMB 1,092,443 thousand, with restricted cash of RMB 99,069 thousand, primarily for performance bond deposits related to engineering services and property maintenance, and bank frozen funds related to construction contract disputes Details of Cash and Cash Equivalents and Restricted Cash | Item | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Cash and Bank Balances | 1,191,512 | 964,534 | | Less: Restricted Cash | (99,069) | (92,338) | | Cash and Cash Equivalents | 1,092,443 | 872,196 | - Restricted cash primarily refers to deposits held for bills payable and performance bonds issued for engineering services, property maintenance, and bank frozen funds related to construction contract disputes291 Trade and Bills Payable As of June 30, 2023, the Group's total trade and bills payable amounted to RMB 4,632,103 thousand, a slight decrease from the end of 2022, and are typically settled within one year Details of Trade and Bills Payable | Item | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Trade Payables | 4,583,562 | 4,759,759 | | Bills Payable | 48,541 | 54,053 | | Total | 4,632,103 | 4,813,812 | - Trade and bills payable are non-interest bearing and are normally settled within one year13 Other Payables and Accruals As of June 30, 2023, the Group's total other payables and accruals amounted to RMB 1,077,053 thousand, an increase from the end of 2022, primarily influenced by growth in contract liabilities and dividends payable Details of Other Payables and Accruals | Item | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Contract Liabilities | 255,751 | 232,089 | | Taxes Payable Other Than Income Tax | 26,631 | 55,296 | | Interest Payable | 16,083 | 10,222 | | Dividends Payable | 176,400 | 28,925 | | Other Payables | 602,188 | 628,984 | | Total | 1,077,053 | 955,516 | - Other payables are non-interest bearing and have no fixed repayment terms15 Provisions As of June 30, 2023, the Group's total provisions amounted to RMB 223 thousand, a decrease from the end of 2022 Details of Provisions | Item | December 31, 2022 (Audited) (RMB thousand) | Amounts Utilized During the Year (RMB thousand) | June 30, 2023 (Unaudited) (RMB thousand) | | :--- | :--- | :--- | :--- | | Classified as Current Liabilities | 600 | (377) | 223 | | Classified as Non-current Liabilities | 480 | – | 480 | | Total | 1,080 | (377) | 703 | Interest-bearing Bank and Other Borrowings As of June 30, 2023, the Group's total interest-bearing bank and other borrowings amounted to RMB 5,713,392 thousand, a slight increase from the end of 2022, with a decrease in short-term borrowings and an increase in long-term borrowings Maturity Profile of Interest-bearing Bank and Other Borrowings | Maturity Period | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Within One Year (Bank Borrowings) | 2,328,580 | 3,608,661 | | Second Year (Bank Borrowings) | 407,698 | 331,992 | | Third to Fifth Year (Bank Borrowings) | 973,748 | 187,802 | | Within One Year (Other Borrowings) | 738,891 | 1,142,791 | | Second Year (Other Borrowings) | 628,879 | 140,735 | | Third to Fifth Year (Other Borrowings) | 479,495 | 84,608 | | After Five Years (Other Borrowings) | 156,101 | 143,652 | | Total | 5,713,392 | 5,640,241 | - The company issued two tranches of super short-term commercial papers on February 22, 2023, and April 20, 2023, each with a face value of RMB 500 million, and actual annual interest rates of 2.25% and 2.36%, respectively269 Commitments As of June 30, 2023, the Group had contracted but unprovided capital commitments, primarily related to plant and equipment, and the previously planned joint venture with Datang Henan has been agreed to be withdrawn Details of Capital Commitments | Item | June 30, 2023 (RMB thousand) | December 31, 2022 (RMB thousand) | | :--- | :--- | :--- | | Buildings | 335 | 322 | | Plant and Equipment | 66,347 | 61,571 | | Equity Investments | – | 15,048 | | Total | 66,682 | 76,941 | - The company and Datang Henan have agreed to withdraw from establishing a joint venture, and the originally planned equity investment of RMB 15,048,000 has been cancelled297 Related Party Transactions The Group has significant related party transactions with China Datang Corporation Ltd. and its associates, including sales of goods and services, purchases of goods and services, interest on borrowings and deposits, outstanding balances, and property leases, and is actively expanding its customer base to reduce reliance on related party transactions - For the six months ended June 30, 2023, the Group's total sales of goods and services to China Datang Corporation Ltd. and its associates amounted to approximately RMB 2,211.1 million, accounting for approximately 88.4% of total revenue133 - For the six months ended June 30, 2023, the Group's total purchases of goods and services from China Datang Corporation Ltd. and its associates amounted to approximately RMB 636.1 million, accounting for approximately 32.1% of total costs133 Details of Related Party Transactions (H1 2023) | Type of Transaction | H1 2023 (RMB thousand) | H1 2022 (RMB thousand) | | :--- | :--- | :--- | | Sales of Goods and Services to China Datang Corporation Ltd. | 2,138,196 | 1,976,528 | | Sales of Goods and Services to Associates and Joint Ventures of China Datang Corporation Ltd. | 72,946 | 125,565 | | Interest Expense on Borrowings from Subsidiaries of China Datang Corporation Ltd. | 7,744 | 6,767 | | Interest Income from Deposits with Subsidiaries of China Datang Corporation Ltd. | 1,687 | 2,855 | | Borrowings from Subsidiaries of China Datang Corporation Ltd. | 605,000 | 1,179,000 | | Purchases of Goods and Services from China Datang Corporation Ltd. | 592,353 | 645,750 | | Purchases of Goods and Services from Associates and Joint Ventures of China Datang Corporation Ltd. | 43,834 | 34,773 | - The Group is actively expanding its customer base, with contracts valued at RMB 145 million entered into with customers other than China Datang Corporation Ltd. and its associates as of June 30, 2023, accounting for approximately 17% of the total contract value133 Fair Value of Financial Instruments and Fair Value Hierarchy The fair value of the Group's financial instruments approximates their carrying amounts, primarily due to their short-term maturity, while the fair value of long-term interest-bearing bank and other borrowings is calculated by discounting future cash flows, with no fair value measurement hierarchy changes or fair value measured liabilities held during the period - The fair values of cash and cash equivalents, restricted cash, trade and bills receivable, financial assets included in prepayments, other receivables and other assets, trade and bills payable, financial liabilities included in other payables and accruals, and the current portion of interest-bearing bank and other borrowings all approximate their carrying amounts, primarily due to their short-term maturity55 - The fair value of the non-current portion of long-term interest-bearing bank and other borrowings (excluding lease liabilities) is calculated by discounting expected future cash flows using current applicable discount rates for instruments with similar terms, credit risk, and remaining maturities306 - During the period, the Group did not reclassify any financial assets or financial liabilities from Level 1 to Level 2, nor did it reclassify any financial assets or financial liabilities into or out of Level 3 of the fair value hierarchy31 - As of June 30, 2023, and December 31, 2022, the Group did not hold any liabilities measured at fair value342 Contingent Liabilities The Group faces contract disputes related to the Gujarat and NLC projects in India, for which performance bond provisions have been fully recognized, but the possibility of other compensation cannot be reliably measured at present - Due to the impact of the COVID-19 pandemic, the construction period for the Gujarat project in India was delayed, and GSECL proposed potential contract termination and performance bond encashment, for which the Group has fully provided for performance bond provisions of RMB 75,848,000309 - Due to the impact of the COVID-19 pandemic, NLC India requested termination of the NLC project contract and encashment of the performance bond of RMB 47,303,000, for which the Group has fully provided and settled the provision32 - As of the date of this announcement, the possibility of other compensation arising from the aforementioned contract disputes cannot be reliably measured32309 Events After the Reporting Period Subsequent to the reporting period, the company's wholly-owned subsidiary, Water Engineering Company, agreed to sell target assets to Datang Baoji Thermal Power Plant, expecting to record a gain on disposal, and the Board also resolved to approve the registration and issuance of super short-term commercial papers and short-term commercial papers/medium-term notes not exceeding RMB 3 billion each - Water Engineering Company agreed to sell various buildings, structures, and equipment to Datang Baoji Thermal Power Plant for a consideration of RMB 37,997,700, with an expected pre-tax gain on disposal of approximately RMB 26,331,800344 - The Board resolved to approve the registration and issuance of super short-term commercial papers not exceeding RMB 3 billion, and short-term commercial papers and medium-term notes totaling not exceeding RMB 3 billion, with the National Association of Financial Market Institutional Investors33 Approval of Interim Condensed Consolidated Financial Information These interim condensed consolidated financial statements were approved and authorized for issue by the Board on August 31, 2023 - The interim condensed consolidated financial statements were approved and authorized for issue by the Board on August 31, 2023157 Management Discussion and Analysis This section provides management's perspective on the Group's operational performance, financial condition, and future outlook Industry Overview In the first half of 2023, the environmental protection industry benefited from national 'dual carbon' goals and green development policies, with energy digitalization, intelligence, and new power system construction creating significant development opportunities for the company's integrated smart energy business - The 20th National Congress of the Communist Party of China emphasized 'promoting green development and harmonious coexistence between humanity and nature,' providing top-level design and policy assurance for the company's green and low-carbon transformation and development61 - The National Energy Administration issued 'Several Opinions on Accelerating the Digital and Intelligent Development of Energy' and the 'Blue Book on the Development of New Power Systems,' which will drive the development of related industries such as photovoltaics, wind power, and energy storage, creating immense opportunities for the Group's integrated smart energy business36 - The National Standardization Administration and 11 other departments issued the 'Guidance on Building a Carbon Peak and Carbon Neutrality Standard System,' projecting the formulation and revision of no less than 1,000 national and industry standards by 2025, bringing new opportunities for the company's new industries in 'dual carbon' related fields62 Green Development and Harmonious Coexistence National policies emphasize promoting green development and harmonious coexistence between humanity and nature, providing policy assurance for the environmental protection industry - The 20th National Congress of the Communist Party of China emphasized 'promoting green development and harmonious coexistence between humanity and nature,' providing top-level design and policy assurance for the company's green and low-carbon transformation and development61 Carbon Peak and Carbon Neutrality Standard System The release of the 'Guidance on Building a Carbon Peak and Carbon Neutrality Standard System' will promote full coverage of carbon accounting and verification standards, bringing opportunities for the company's new industries in 'dual carbon' related fields - The 'Guidance on Building a Carbon Peak and Carbon Neutrality Standard System' was released, projecting the formulation and revision of no less than 1,000 national and industry standards by 2025, achieving full coverage of carbon accounting and verification standards in major industries62 Construction of New Energy System The National Energy Administration released the 'Blue Book on the Development of New Power Systems,' outlining a 'three-step' development path that will drive the growth of industries such as photovoltaics, wind power, and energy storage, creating immense opportunities for the company's integrated smart energy business - The National Energy Administration released the 'Blue Book on the Development of New Power Systems,' comprehensively elaborating on the development philosophy and characteristics of new power systems, and formulating a 'three-step' development path36 - The planning and construction of a new energy system will drive the vigorous development of related industries such as photovoltaics, wind power, and energy storage, creating immense opportunities for the Group's integrated smart energy business36 Business Review In the first half of 2023, the Group maintained stable concession installed capacity in environmental protection and energy-saving solutions, increased denitration catalyst production and sales, and actively expanded into non-power industries, while the renewable energy business secured new energy storage EPC projects, thermal power engineering business was not conducted, no new overseas projects were signed, and multiple patents were granted in R&D - As of June 30, 2023, the Group's cumulative installed capacity for desulfurization concession operations was 48,250 MW; and for denitration concession operations was 41,240 MW63 - From January to June 2023, the Group's denitration catalyst business achieved production and sales volumes of 13,716.26 cubic meters and 31,074.86 cubic meters, respectively, and actively sold to non-power industries and overseas customers3964318 - From January to June 2023, the Group signed 1 new energy storage EPC project with an installed capacity of 100 MWh, and was awarded 1 renewable energy engineering project pending signing with an installed capacity of 100 MW43 - From January to June 2023, the Group did not undertake thermal power engineering business, had no new overseas projects signed, and no projects under execution324325 - In the first half of 2023, the Group obtained 25 patent grants, including 13 invention patents, bringing the cumulative number of valid patents to 1,246326 Environmental Protection and Energy-Saving Solutions Business This business encompasses environmental facility concession operations, denitration catalysts, environmental facility engineering, water treatment, and energy-saving businesses, with stable concession installed capacity, increased catalyst production and sales, active expansion into non-power industries, and energy-saving achieved through energy consumption diagnostics and technological applications - As of June 30, 2023, the Group's cumulative installed capacity for desulfurization concession operations was 48,250 MW; and for denitration concession operations was 41,240 MW63 - From January to June 2023, the Group's denitration catalyst business achieved production and sales volumes of 13,716.26 cubic meters and 31,074.86 cubic meters, respectively, with 8,761.29 cubic meters sold to customers outside China Datang Corporation Ltd., including 2,900.8 cubic meters to overseas customers and 968.45 cubic meters to non-power industry customers3964318 - From January to June 2023, the Group continued to undertake environmental facility engineering businesses, including desulfurization, denitration, dust removal, ultra-low emission, and industrial plant dust control, and actively explored non-power industry markets such as petroleum, coking, steel, and cement40 - From January to June 2023, the Group focused on energy consumption diagnostics and 'one plant, one policy' indicator improvement, achieving approximately 15% reduction in ammonia injection and 5-10% decrease in slurry circulation pump power consumption through the application of new technologies such as denitration fine ammonia injection control technology158 Environmental Facility Concession Operations As of June 30, 2023, the Group's cumulative installed capacity for desulfurization concession operations was 48,250 MW, and for denitration concession operations was 41,240 MW - As of June 30, 2023, the Group's cumulative installed capacity for desulfurization concession operations was 48,250 MW; and for denitration concession operations was 41,240 MW63 Denitration Catalyst Business In the first half of 2023, denitration catalyst production and sales volumes were 13,716.26 cubic meters and 31,074.86 cubic meters, respectively, with active expansion into non-power industries and overseas markets H1 2023 Denitration Catalyst Business Data | Indicator | Quantity (cubic meters) | | :--- | :--- | | Production Volume | 13,716.26 | | Sales Volume | 31,074.86 | | Volume of Waste Catalyst Comprehensive Utilization | 2,437.6 | - From January to June 2023, the Group sold 8,761.29 cubic meters of catalysts to customers outside China Datang Corporation Ltd., including 2,900.8 cubic meters to overseas customers and 968.45 cubic meters to non-power industry customers such as glass and alumina industries318 Environmental Facility Engineering Business In the first half of 2023, the Group continued to undertake engineering businesses including desulfurization, denitration, dust removal, ultra-low emission, and industrial plant dust control, and actively explored non-power industry markets - From January to June 2023, the Group continued to undertake environmental facility engineering businesses, including desulfurization, denitration, dust removal, ultra-low emission, and industrial plant dust control, and actively explored non-power industry markets such as petroleum, coking, steel, and cement40 H1 2023 Environmental Facility Engineering Business in Power Industry | Project | Number of Awarded and Signed Projects | Value of Awarded and Signed Projects (RMB million) | Number of Projects Under Construction | Value of Projects Under Construction (RMB million) | | :--- | :--- | :--- | :--- | :--- | | Desulfurization | 1 | 26.51 | 2 | 243.66 | | Denitration | 2 | 52.26 | 1 | 19.30 | | Dust Removal | 0 | 0 | 2 | 228.16 | | Others | 2 | 94.80 | 0 | 0 | Water Treatment Business As of June 30, 2022, the Group had 4 operational water treatment engineering projects and 7 projects under construction - As of June 30, 2022, the Group had 4 operational water treatment engineering projects and 7 water treatment engineering projects under construction320 Energy-Saving Business As of June 30, 2023, the Group had 1 energy performance contracting project under execution, with a total investment of RMB 37.5098 million - As of June 30, 2023, the Group had 1 energy performance contracting project under execution, with a total investment of RMB 37.5098 million321 Renewable Energy Business The Group is actively expanding in the renewable energy sector, having signed new energy storage EPC projects and operating multiple distributed photovoltaic power generation projects - From January to June 2023, the Group signed 1 new energy storage EPC project with an installed capacity of 100 MWh, and was awarded 1 renewable energy engineering project pending signing with an installed capacity of 100 MW43 - As of June 30, 2023, the Group had a total of 3 renewable energy engineering projects under construction, with a total installed capacity of 6.535 MW43 - As of June 30, 2023, the Group had 8 operational distributed photovoltaic power generation projects, with a total installed capacity of 7.97 MW322 Investment Business As of June 30, 2023, the Group had 8 operational distributed photovoltaic power generation projects, with a total installed capacity of 7.97 MW - As of June 30, 2023, the Group had 8 operational distributed photovoltaic power generation projects, with a total installed capacity of 7.97 MW322 Engineering Business In the first half of 2023, the Group signed 1 new energy storage EPC project with an installed capacity of 100 MWh, and had 3 renewable energy engineering projects under construction - From January to June 2023, the Group signed 1 new energy storage EPC project with an installed capacity of 100 MWh, and was awarded 1 renewable energy engineering project pending signing with an installed capacity of 100 MW43 - As of June 30, the Group had a total of 3 renewable energy engineering projects under construction, with a total installed capacity of 6.535 MW43 Thermal Power Engineering Business From January to June 2023, the Group did not undertake thermal power engineering business - From January to June 2023, the Group did not undertake thermal power engineering business324 Overseas Business In the first half of 2023, the Group had no new overseas projects signed and no projects under execution - From January to June 2023, the Group had no new overseas projects signed and no projects under execution325 Research and Development In the first half of 2023, the Group obtained 25 patent grants, including 13 invention patents, bringing the cumulative number of valid patents to 1,246 - In the first half of 2023, the Group obtained 25 patent grants, including 13 invention patents, bringing the cumulative number of valid patents to 1,246326 Discussion and Analysis of Financial Position and Operating Results In the first half of 2023, the Group achieved growth in both revenue and profit, primarily driven by increased construction service revenue and reduced finance costs, with a slight decrease in gross margin but overall improved profitability, significant increases in cash and cash equivalents and net current assets, and a lower net debt to capital ratio, indicating an improved financial position - The Group's revenue increased by 7.8% to RMB 2,499.2 million for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to increased construction service revenue68 - The Group's profit for the period was RMB 270.1 million, an increase of RMB 70.2 million or 35.1% compared to the same period in 2022162177 - The Group's cash and cash equivalents increased by 25.3% to RMB 1,092.4 million as of June 30, 2023, from RMB 872.2 million as of December 31, 202282 - The Group's net current assets increased by 503.6% to RMB 2,439.8 million as of June 30, 2023, from RMB 404.2 million as of December 31, 2022, primarily due to increased trade receivables and reduced interest-bearing bank and other borrowings83 - The Group's net debt to capital ratio was 39.71% as of June 30, 2023, a decrease of 1.17 percentage points from 40.88% as of December 31, 202286 Overview In the first half of 2023, the Group achieved growth in both revenue and profit, with increases in cash and cash equivalents and total assets, a slight rise in total liabilities, and an improved return on total assets H1 2023 Financial Overview | Indicator | June 30, 2023 (RMB million) | December 31, 2022 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2,499.2 | - | +7.8 | | Profit for the Period | 270.1 | - | +35.1 | | Profit Attributable to Owners of the Parent | 266.2 | - | - | | Cash and Cash Equivalents | 1,092.4 | 872.2 | +25.3 | | Total Assets | 18,478.3 | 18,348.3 | +0.7 | | Total Liabilities | 11,461.9 | 11,451.5 | +0.1 | | Return on Total Assets | 1.46% | 1.11% (2022同期) | +0.35 percentage points | Operating Results The Group's revenue grew by 7.8% and gross profit by 6.8% in the first half of 2023, despite a slight decrease in gross margin, while other income significantly increased, finance costs decreased, and both profit before tax and profit for the period achieved substantial growth - The Group's revenue increased by 7.8% to RMB 2,499.2 million for the six months ended June 30, 2023, from RMB 2,318.8 million in the same period of 2022, primarily due to increased construction service revenue68 - The Group's gross profit increased by 6.8% to RMB 517.2 million from RMB 484.2 million in the same period of 2022, but the gross margin slightly decreased from 20.9% to 20.7%105 - Other income and losses increased by 89.3% to RMB 67.2 million compared to the same period in 2022, primarily due to an increase in government grants66 - Finance costs decreased by 13.6% to RMB 89.1 million compared to the same period in 2022, primarily due to a reduction in the annual interest rate on borrowings during the current period164 - Profit before tax increased by 32.0% to RMB 319.4 million for the six months ended June 30, 2023, from RMB 241.9 million in the same period of 202298 - Profit for the period increased by 35.1% from RMB 199.9 million to RMB 270.1 million, with its proportion of total revenue rising to 10.8%177 Revenue (Operating Results) The Group's revenue increased by 7.8% year-on-year to RMB 2,499.2 million in the first half of 2023, primarily driven by growth in construction service revenue - The Group's revenue increased by 7.8% to RMB 2,499.2 million for the six months ended June 30, 2023, from RMB 2,318.8 million in the same period of 2022, primarily due to increased construction service revenue68 Cost of Sales The Group's cost of sales increased by 8.0% year-on-year to RMB 1,982.0 million, in line with revenue growth - The Group's cost of sales increased by 8.0% to RMB 1,982.0 million for the six months ended June 30, 2023, from RMB 1,834.6 million in the same period of 2022, primarily due to increased construction costs in line with revenue growth during the year69 Selling and Distribution Expenses The Group's selling and distribution expenses increased by 55.6% year-on-year to RMB 9.8 million - The Group's selling and distribution expenses increased by 55.6% to RMB 9.8 million for the six months ended June 30, 2023, from RMB 6.3 million in the same period of 202270 Administrative Expenses The Group's administrative expenses increased by 1.8% year-on-year to RMB 162.2 million - The Group's administrative expenses increased by 1.8% to RMB 162.2 million for the six months ended June 30, 2023, from RMB 159.3 million in the same period of 202271 Other Gains and Losses The Group's other gains and losses increased by 89.3% to RMB 67.2 million compared to the same period in 2022, primarily due to higher government grants - The Group's other gains and losses increased by 89.3% to RMB 67.2 million for the six months ended June 30, 2023, from RMB 35.5 million in the same period of 2022, primarily due to an increase in government grants compared to last year66 Net Other Expenses For the six months ended June 30, 2023, the Group had no net other expenses, compared to RMB 4.3 million in the same period of 2022, which was primarily due to exchange differences arising from provisions for losses on pending litigation - For the six months ended June 30, 2023, the Group had no net other expenses, compared to RMB 4.3 million in the same period of 2022, which was due to exchange differences arising from provisions for losses on pending litigation96 Finance Costs (Operating Results) The Group's finance costs decreased by 13.6% year-on-year to RMB 89.1 million, primarily due to a reduction in the annual interest rate on borrowings - The Group's finance costs decreased by 13.6% to RMB 89.1 million for the six months ended June 30, 2023, from RMB 103.1 million in the same period of 2022, primarily due to a reduction in the Group's annual interest rate on borrowings during the current period compared to the prior year164 Profit Before Tax The Group's profit before tax increased by 32.0% year-on-year to RMB 319.4 million - The Group's profit before tax increased by 32.0% to RMB 319.4 million for the six months ended June 30, 2023, from RMB 241.9 million in the same period of 2022[98](index=98&type=
大唐环境(01272) - 2023 - 中期业绩