BEIJING ENTERPRISES

3718
End-of-day quote. End-of-day quote  - 01/25
2.33HKD +1.75%

Beijing Enterprises Urban Resources : 2020 Interim Report

09/22/2020 | 06:05pm

CONTENTS

Corporate Information

2

Chairman's Statement

3

Management Discussion and Analysis

6

Condensed Consolidated Statement of Profit or Loss

15

Condensed Consolidated Statement of Comprehensive Income

16

Condensed Consolidated Statement of Financial Position

17

Condensed Consolidated Statement of Changes in Equity

19

Condensed Consolidated Statement of Cash Flows

20

Notes to Condensed Consolidated Financial Information

21

Discloseable Information

37

Corporate Governance

40

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Mr. Zhao Kexi (Chief Executive Officer)

Mr. Zhang Hailin

Mr. Huang Zhiwan

Non-Executive Directors

Mr. Zhou Min (Chairman)

Mr. Li Li

Mr. Li Haifeng

Independent Non-Executive Directors

Mr. Orr Ka Yeung, Kevin

Mr. Wu Tak Kong

Dr. Du Huanzheng

AUDIT COMMITTEE

Mr. Wu Tak Kong (Chairman)

Mr. Orr Ka Yeung, Kevin

Dr. Du Huanzheng

NOMINATION COMMITTEE

Mr. Zhou Min (Chairman)

Mr. Orr Ka Yeung, Kevin

Mr. Wu Tak Kong

REMUNERATION COMMITTEE

Dr. Du Huanzheng (Chairman)

Mr. Zhao Kexi

Mr. Wu Tak Kong

COMPANY SECRETARY

Mr. Fung Che Wai, Anthony

STOCK CODE

3718

WEBSITE

www.beur.net.cn

INVESTOR RELATIONS CONTACT

Email Address: ir@beurg.com.hk

REGISTERED OFFICE

Cricket Square

Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111

Cayman Islands

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG

Units 6705-07

67th Floor, Central Plaza

18 Harbour Road, Wanchai

Hong Kong

PRINCIPAL PLACE OF BUSINESS IN THE PRC

5th to 8th Floor Block 101 Baiziwan East Lane Chaoyang District Beijing

PRC

PRINCIPAL SHARE REGISTRAR

Conyers Trust Company (Cayman) Limited

Cricket Square

Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111

Cayman Islands

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Investor Services Limited

Level 54, Hopewell Centre

183 Queen's Road East

Hong Kong

AUDITOR

Ernst & Young

COMPLIANCE ADVISER

Somerley Capital Limited

PRINCIPAL BANKERS

In Hong Kong:

DBS Bank (Hong Kong) Limited

CMB Wing Lung Bank

China Minsheng Banking Corp., Ltd.

In Mainland China:

Bank of Beijing

Hua Xia Bank

Bank of Jiangsu

2

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

CHAIRMAN'S STATEMENT

Dear Shareholders,

On behalf of the board of directors (the "Board") of Beijing Enterprises Urban Resources Group Limited (the "Company"), I am pleased to present the interim report of the Company and its subsidiaries (collectively referred to as the "Group") for the six months ended 30 June 2020 (the "Reporting Period").

In the first half of 2020, the Group adhered ardently to its two principal businesses, namely environmental hygiene services and hazardous waste treatment services, focused on the goal of becoming a "Leading Integrated Service Provider of Urban Environment and Resources Utilization" while grasping epidemic control on one hand, the Group firmly secured production and operation, organized various actions to advance corporate regulatory governance, refined management standard and secured high-quality projects, thus ensuring a favourable business trend.

ACTIONS ON EPIDEMIC CONTROL AND SAFETY MANAGEMENT

In the first half of 2020, the novel coronavirus epidemic broke out and spread out globally. In view of such unprecedented epidemic, the Group consolidated our vision of "Life comes first", and responded efficiently and reacted swiftly against the situation, placing epidemic control at top priority.

To tackle the epidemic effectively, the Group followed the principle of "Aiding Each Other with Cohesiveness, Preventing and Controlling Epidemic Scientically, Implementing Strategies with Precision", maintained a stern stance in the defence and control of the epidemic while conscientiously deployed various epidemic control works, thus safeguarding the life and health and safety of all our employees. In respect of businesses, the Group proactively completed all actions associated with the environment and hygiene services for all of its responsible cities and villages with higher requirements, higher standards and better quality, thereby vigorously reinforcing the anti-epidemic work in all the servicing regions. The Group's five medical and hazardous waste treatment enterprises launched epidemic donations and assisted in the safe delivery and packaging of supplies such as sanitizers and so forth. The Group's dedicated medical waste disposal company connected with 15 waste sites involved in the epidemic and made every effort to engage in the anti-epidemic work. On the other hand, the Group progressively formulated a series of documents and proposals on epidemic prevention and control while expanding the promotional education continuously in order to enhance employees' awareness of self-defence and establish a joint prevention and control mechanism, thereby building a strong defence line against the epidemic. In order to implement the supply of prevention and control materials, the Group purchased and reserved epidemic prevention materials through multiple channels to effectively guarantee the prevention needs of frontline workers. By strictly requiring each unit to set up inspection points and service stations to strengthen the epidemic inspection, strictly prohibiting staff gathering and imposing stringent control on employee induction management, the Group could prevent and control the epidemic effectively and there were "Zero Disease Cases" among the Group's staff members during the Reporting Period.

During the Reporting Period, the Group further improved the safety and environmental system (HSE), strengthened the safety and environmental management and control measures as well as improving the Letter of Target Responsibility for the HSE. Moreover, assistance inspections were carried out to strengthen the guidance on dedicated key safety and environment work as well as reinforcing the investigation and rectification of hidden hazards. The Group organized the safety production month campaign on the theme of "Eliminate Accidents and Hidden Hazards. Consolidate the Safety Line of Defence", launching various promotional activities to enhance the safety awareness of all employees, thereby actively providing safety and environment protection for the high-quality development of the Group's businesses.

During the Reporting Period, the Group continued to operate strictly in compliance with laws and regulations, improving the corporate governance structure and standardizing the management functions of the Board, thereby comprehensively enhancing the capabilities of internal risk control while securing a strong brand image. With the implementation of review on investment proposals and anti-fraud inspections, the safety management, operation risk prevention and control of the Company were facilitated, ensuring safety and protection to provide a clean environment for good living.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

3

CHAIRMAN'S STATEMENT (CONTINUED)

BUSINESS REVIEW

The Group accomplished the epidemic control properly and at the same time acted in accordance with the overall planning, making every effort to ensure the listing and stable business operations.

In terms of the environmental hygiene business, we emphasized the building of a technical system to improve the service quality. To promote the establishment of the intelligent environmental hygiene system, the Group has launched 20 intelligent environmental hygiene projects. Through the practice and application of those projects, a standardized methodology for data collection and analysis was confirmed and a database was established accordingly. With our continued efforts to strengthen the promotion of environmental hygiene projects in large and medium-sized cities, as at 30 June 2020, we had a total of 107 environmental hygiene projects, accounting for a total contracted area of approximately 177,500,000 sq.m..

In the aspect of hazardous waste treatment business, since the resumption of work and production, we have made great efforts in management, organized precise production scientifically, thereby effectively releasing the productivity and steadily increasing the business volume. Moreover, we continued to promote the construction of the Enterprise Resources Planning (ERP) system, progressively advancing the effective integration of data management to provide support for scientific decision making. As at 30 June 2020, there were a total of 7 hazardous waste treatment projects in operation, 1 hazardous waste treatment project in trial operation, 4 projects under construction and 3 projects planned to be constructed in future. The Group's projects that engaged in hazard-free waste disposal had a total designed treatment capacity of 247,342 tons per annum. The projects engaged in recycling and reuse had a total designed treatment capacity of 250,000 tons per annum.

For the six months ended 30 June 2020, the Group mainly achieved the following results:

  • The Group recorded a revenue of approximately HK$1,546.0 million, representing an increase of approximately 20.1% as compared with that of approximately HK$1,287.1 million in the corresponding period last year.
  • Profit for the period from continuing operations attributable to shareholders of the Company for the six months ended 30 June 2020 increased by approximately 71.6% to approximately HK$217.8 million as compared to approximately HK$126.9 million for the corresponding period last year.
  • Basic and diluted earnings per share for profit from continuing operations for the six months ended 30 June 2020 were approximately HK6.17 cents (for the six months ended 30 June 2019: approximately HK4.70 cents).
  • Revenue from the Group's environmental hygiene business for the six months ended 30 June 2020 increased by approximately 39.6% to approximately HK$1,266.1 million as compared to approximately HK$906.6 million for the corresponding period last year.
  • Gross profit margin of the Group's environmental hygiene business projects for the six months ended 30 June 2020 (not taking into account the VAT and other reliefs) increased to approximately 26.3% as compared to approximately 24.1% for the corresponding period last year.
  • Net cash flows generated from operating activities for the six months ended 30 June 2020 were approximately HK$378.7 million (for the six months ended 30 June 2019: approximately HK$201.3 million).

4

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

CHAIRMAN'S STATEMENT (CONTINUED)

PROSPECT

In the second half of 2020, the Group will continue to grasp the post-listing corporate governance work, deepening precision management and improving operation capabilities. The Group will seize the opportunities arising from the full implementation of mandatory requirements for garbage sorting and marketization of the environmental hygiene sector by strengthening the service contents and technical support related to the environmental hygiene business, elevating the operation quality, upgrading the service standards while further increasing the development of quality projects, thereby expanding the operation scale.

As affected by the epidemic and domestic economic situation, the investment in newly constructed hazardous waste treatment projects is more active in various regions, thereby benefiting the market expansion of the Group. However, as there is fierce competition in the hazard-free market in some regions and the standard of hazardous waste treatment has been further increased, there are higher requirements for the Group's capabilities of operating the hazardous waste treatment business. The Company will formulate effective strategies tailored for the specific types of hazardous wastes in different regions in order to enhance the effectiveness of project operations while making deployment for expanding the market layout.

At present, the epidemic in the Mainland China has been effectively controlled. As the central and local governments announce and implement various measures and related preferential policies to facilitate business development after the epidemic, the progress of resumption of work and production is gradually expediting. The short-term impacts caused by the epidemic will be gradually mitigated and the economic and social order are being restored in order. At the same time, as the epidemic is gradually under control, many information platforms start to resume their programs for bidding applications for environmental hygiene projects in March. With the prevention and control of epidemic becoming the norms, it is probable that additional environmental hygiene services such as sterilization and disinfection will become a normalized mode, which will increase room for the market of environmental hygiene services. As for the hazardous waste treatment business which was more affected by the epidemic in the first half of the year, while the epidemic was under control, customer demands have been improved significantly in the second quarter. We expect that the related productivity and market demands will gradually return to normal levels in the second half of the year.

APPRECIATION

On behalf of the Board, I would like to extend my sincerest gratitude and blessings to our shareholders, customers, staff members and cooperation partners for their great and continuous support to the Group.

Zhou Min

Chairman

27 August 2020

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

5

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL HIGHLIGHTS

The analysis of the Group's financial results, by business segments, for the six months ended 30 June 2020 and 2019 is set out in details below:

Profit attributable to shareholders

of the Company from

Revenue

Gross profit margin

continuing operations

2020

2019

Change

2020

2019

Change

2020

2019

Change

HK$'000

HK$'000

%

%

%

%

HK$'000

HK$'000

%

(Restated)

(Restated)

(Restated)

Environment hygiene

services

1,266,068

906,640

39.6%

31.8%

24.1%

7.7%

211,151

86,152

145.1%

Hazardous waste

treatment business

- Hazard-free waste

disposal projects

113,355

155,176

(27.0)%

46.2%

51.9%

(5.7)%

22,190

32,571

(31.9)%

- Recycling and reuse

projects

80,068

122,037

(34.4)%

30.8%

33.9%

(3.1)%

17,121

32,558

(47.4)%

Subtotal

193,423

277,213

(30.2)%

39.8%

44.0%

(4.2)%

39,311

65,129

(39.6)%

Others

86,511

103,221

(16.2)%

32.1%

28.5%

3.6%

12,032

10,596

13.6%

Business results

1,546,002

1,287,074

20.1%

32.9%

28.7%

4.2%

262,494

161,877

62.2%

Corporate and other

unallocated income and

expenses, net

(44,678)

(34,930)

27.9%

Total

217,816

126,947

71.6%

BUSINESS REVIEW

The Group is principally engaged in environmental hygiene services, hazardous waste treatment business and waste electrical and electronic equipment treatment business.

Environmental hygiene services

Environmental hygiene services refer to services in relation to environmental hygiene maintenance and management, such as road cleaning, garbage collection and transportation, garbage transportation station management, public toilet management and other services. Generally, the Group utilises existing public facilities, including garbage transportation stations and public toilets, to provide comprehensive environmental hygiene services. Our environmental hygiene services primarily cover comprehensive road cleaning, garbage sorting, garbage collection and transportation, garbage transportation station management, public toilet management, manure collection and transportation, greenway maintenance, river cleaning services and property management services.

According to a report by Frost & Sullivan, a global market research and consulting firm, the size of China's environmental hygiene service market increased from RMB138.9 billion in 2014 to RMB299.9 billion in 2019, and is expected to further increase to RMB559.1 billion in 2024.

In line with common practice in the environmental hygiene service industry, the relevant market is classified into two sectors, namely the government agency sector and the enterprise sector. The enterprise sector accounted for 11.6% of the total market in 2014. The share of the enterprise sector as a percentage of the total market was 47.3% in 2019, and is expected to further increase to 74.9% in 2024.

6

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)

As at 30 June 2020, the Group had 107 environmental hygiene services projects, the movements of which, during the six months ended 30 June 2020, are as follows:

Number of

projects

As at 1 January 2020

97

Newly added

13

Terminated/ceased to operate

(3)

As at 30 June 2020

107

The Group operates its environment hygiene services projects under the following models:

Number of

Operating Models

projects

Operation & Maintenance ("O&M")

97

Public-Private-Partnership ("PPP")

Build-Transfer-Operate ("BTO")

7

Transfer-Operate-Transfer

3

Total

107

Under the O&M model, the Group acts as a third-party professional municipal operator for operation and maintenance for its customers, i.e., the local government, which usually outsource the municipal projects whose construction has been completed or nearly completed to the Group. Under the PPP model, the Group enters into operating concession arrangements with the local government which regulate the scope and price of services that the Group provides by utilizing the assets, and also set out the treatment of any significant residual interests in the assets at the end of the term of the arrangements.

During the six months ended 30 June 2020, the Group successfully won a total of 13 environmental hygiene service projects through public tenders with total contract value and estimated annual revenue amounting to approximately RMB8.0 billion and RMB724.2 million, respectively (equivalent to approximately HK$8.9 billion and HK$804.7 million, respectively). During the six months ended 30 June 2020, the Group had recorded a total amount of approximately HK$151.8 million as revenue in respect of these 13 projects.

As at 30 June 2020, the Group had a total contracted area of approximately 177.5 million sq.m. (31 December 2019: 150.3 million sq.m.) with its environmental hygiene service projects, which created an average revenue of approximately HK$6.2 per sq.m. (six months ended 30 June 2019: HK$5.5 per sq.m.).

Hazardous waste treatment business

Under the hazardous waste treatment business, the Group processes and safely disposes of hazardous waste for industrial companies and medical institutions and charges them waste treatment fees. The Group's hazardous waste treatment business mainly covers collection, transportation, storage and disposal of wastes such as medical waste and industrial solid waste.

According to a report by Frost & Sullivan, a global market research and consulting firm, from 2014 to 2019, the disposal volume of hazardous waste in China increased from 9.3 million tons to 34.8 million tons, representing a compound annual growth rate ("CAGR") of 30.2%. Disposal is mainly used for waste on which no other proper treatment methods are available. Hazard-free waste disposal aims to eliminate or minimize negative effect that hazardous waste may have on the environment. Landfill and incineration are two of the most common treatment methods for solid hazardous waste. For liquid hazardous waste, common treatment methods include flocculation and purification. Before being disposed of, hazardous waste needs to undergo certain pretreatment methods based on its nature. Common pretreatment methods include physical-chemical and solidification or stabilization.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

7

MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)

As at 30 June 2020, the Group had 7 hazardous waste treatment projects in operation and 1 hazardous waste treatment project in trial operation. As of 30 June 2020, treatment facilities of our projects that engaged in hazard-free waste disposal had a total designed treatment capacity of 247,342 tons per annum (31 December 2019: 370,396 tons). Treatment facilities of projects that engaged in recycling and reuse had a total designed treatment capacity of 250,000 tons per annum (31 December 2019: 250,000 tons), as of the same date. As of 30 June 2020, the Group also had 4 projects under construction and 3 projects planned for future construction.

Other business

Our other business represents waste electrical and electronic equipment treatment business. As of 30 June 2020, the Group had 2 revenue-generating waste electrical and electronic equipment treatment projects.

The Group procures waste electrical and electronic appliances mainly from local waste electrical and electronic appliances recycling stations. Types of dismantled equipment include computers, refrigerators, television sets, washing machines and air conditioners.

For the six months ended 30 June 2020, revenue from our waste electrical and electronic equipment treatment business amounted to approximately HK$86.5 million (six months ended 30 June 2019: HK$103.2 million), representing approximately 5.6% (six months ended 30 June 2019: 8.0%) of our total revenue.

FINANCIAL PERFORMANCE

Revenue and gross profit margin

The Group's total revenue from continuing operations increased to HK$1,546.0 million for the six months ended 30 June 2020 (six months ended 30 June 2019: HK$1,287.1 million), primarily due to increased revenue from the Group's environmental hygiene services projects.

Environmental hygiene services

During the six months ended 30 June 2020, the Group recorded a total revenue of HK$1,266.1 million (six months ended 30 June 2019: HK$906.6 million) from its environmental hygiene services projects. As at 30 June 2020, the Group had a total of 107 environmental hygiene services projects (30 June 2019: 80).

The gross profit margin of the Group's environmental hygiene services projects increased significantly from 24.1% for the six months ended 30 June 2019 to 31.8% for the six months ended 30 June 2020, mainly because of:

  1. increase in relief related to value-added-tax ("VAT Relief") granted by the local government in the People's Republic of China (the "PRC") due to the COVID-19 pandemic in the amount of approximately HK$63.8 million (before taking into account the effect of corporate income tax and non-controlling interests of the respective projects), which resulted in the increase in revenue recognized;
  2. increase in the relief related to the reduction of the Group's social welfare and security contributions and other relief ("Other Relief") granted by the local government in the PRC due to the COVID-19 pandemic in the amount of approximately HK$23.7 million (before taking into account the effect of corporate income tax and non-controlling interests of the respective projects), which resulted in the decrease in cost of sales; and
  3. increase in the gross profit margin, excluding the effect on the reliefs as mentioned in (i) and (ii) above, from the Group's environmental hygiene service projects from approximately 24.1% for the six months ended 30 June 2019 to approximately 26.3% for the six months ended 30 June 2020.

8

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)

The following table sets forth the financial impacts of the VAT Relief and the Other Relief on the revenue and gross profit margin of the Group's environmental hygiene services projects for the six months ended 30 June 2020:

For the six months ended 30 June

Environmental hygiene services

2019

2020

HK$'000

HK$'000

Revenue

1,266,068

906,640

Less: VAT Relief

(63,793)

-

Revenue excluding VAT Relief

1,202,275

906,640

Cost of sales

862,885

688,230

Add: Other Relief

23,657

-

Costs of sales excluding Other Relief

886,542

688,230

Gross profit excluding VAT Relief and Other Relief

315,733

218,410

Gross profit margin excluding VAT Relief and Other Relief

26.3%

24.1%

Hazardous waste treatment services

During the six months ended 30 June 2020, the Group recorded a total revenue of HK$193.4 million (six months ended 30 June 2019: HK$277.2 million) from its hazardous waste treatment services projects. Due to the out-break of the COVID-19 pandemic in early 2020, the businesses of the customers of the Group's hazardous waste treatment services projects were seriously affected, which in turn leaded to the decrease in the Group's revenue.

The Group's gross profit margin of its hazardous waste treatment services projects decreased from 44.0% for the six months ended 30 June 2019 to 39.8% for the six months ended 30 June 2020, mainly due to drop in the average sales price.

The following table sets forth an analysis of the sales price of the Group's hazardous waste treatment service projects:

Hazard-free waste disposal projects

Recycling and reuse projects

Total

Six months

Six months

Six months

ended 30 June

Change

ended 30 June

Change

ended 30 June

Change

2020

2019

2020

2019

2020

2019

Revenue (HK$'000)

113,355

155,176

(27.0)%

80,068

122,037

(34.4)%

193,423

277,213

(30.2)%

Less: Disposed subsidiaries

-

(37,027)

N/A

-

-

-

-

(37,027)

N/A

113,355

118,149*

(4.1)%

80,068

122,037

(34.4)%

193,423

240,186*

(19.5)%

Actual treatment/sale volume (tons)

39,175

32,054

22.2%

28,458

36,944

(23.0)%

67,633

68,998

(2.0)%

Average sales price (HK$)

2,894

3,686

(21.5)%

2,814

3,303

(14.8)%

2,860

3,481

(17.8)%

  • Excluding revenue generated from disposed subsidiaries in the amount of approximately HK$37.0 million for analysis purposes.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

9

MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)

The actual treatment of the Group's hazard-free waste disposal projects increased from 32,054 tons for the six months ended 30 June 2019 to 39,175 tons for the six months ended 30 June 2020, whereas the average sales price decreased from HK$3,686 per ton for the six months ended 30 June 2019 to HK$2,894 per ton for the six months ended 30 June 2020.

The sales volume of the Group's recycling and reuse projects decreased from 36,944 tons for the six months ended 30 June 2019 to 28,458 tons for the six months ended 30 June 2020, and the average sales price decreased from HK$3,303 per ton for the six months ended 30 June 2019 to HK$2,814 per ton for the six months ended 30 June 2020 mainly because of the drop in the market price of methanol during the period.

Administrative expenses

Administrative expenses for the six months ended 30 June 2020 decreased to HK$138.1 million, as compared to the corresponding period in 2019 of HK$140.7 million. The decrease was mainly due to certain of the relief related to the social welfare and security contributions granted by the local government recognised as administrative expenses in the amount of HK$5.8 million during the six months ended 30 June 2020.

Finance costs

Finance costs mainly represented interests on bank and other borrowings of HK$36.2 million (six months ended 30 June 2019: HK$33.5 million). The increase in finance costs was mainly due to the increase in bank and other borrowings during the six months ended 30 June 2020.

Income tax expense

The income tax expense increased from HK$48.8 million for the six months ended 30 June 2019 to HK$82.1 million for the six months ended 30 June 2020, mainly because of the increase in the operating taxable profits of the Group's environmental hygiene services projects.

Discontinued operations

The Group disposed of its 51% equity interests in Binnan Group in October 2019. For further details, please refer to note 7 to the condensed consolidated financial information in this report.

Property, plant and equipment

Property, plant and equipment consist of buildings, plant and machinery, furniture, fixtures and equipment, motor vehicles and construction on progress. The increase in property, plant and equipment during the six months ended 30 June 2020 was mainly due to the net effect of (i) purchase of motor vehicles for environmental hygiene services projects in the amount of HK$264.1 million; (ii) additions of construction in progress for hazardous waste treatment business in the amount of HK$135.7 million; and (iii) depreciation provided during the six months ended 30 June 2020 in the amount of HK$109.7 million.

Right-of-use assets

Right-of-use assets consist of buildings, motor vehicles and prepaid land lease premium. Increase in right-of-use assets was mainly due to net effect of (i) additions in buildings of HK$51.2 million; (ii) additions in prepaid land lease premium of HK$41.6 million; and (iii) amortisation of HK$17.1 million.

Goodwill

Goodwill mainly represented the goodwill arose from the acquisition of subsidiaries in 2018 or before and the change was mainly due to exchange rate differences on foreign exchange translation.

Operating concessions

Operating concessions represented arrangements involving the Group as a provider of environmental hygiene services on behalf of the relevant government agencies. Decrease in operating concessions was due to amortisation of HK$5.4 million.

10

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)

Trade and bills receivables

Increase in trade and bills receivables was mainly due to continuous business expansion in environmental hygiene services.

The following table sets forth the turnover days of the Group's trade receivables:

31 December

30 June

2020

2019

Average trade and bills receivable turnover days on

continuing operations (days)

100

92

Environmental decommissioning fee receivable

Environmental decommissioning fee receivable represented government subsidies receivable from the PRC central government for the Group's waste electrical and electronic equipment treatment services projects.

Contract assets

Contract assets represented the construction services in relation to Group's PPP projects for environmental hygiene services. Decrease in the contract assets was mainly due to the recognition of contract assets as long term trade receivables as certain construction services had been provided and completed.

Prepayments, deposit and other receivables

Decrease in prepayments, deposit and other receivables was mainly due to (i) decrease of HK$4.6 million in the guarantee deposits held by customers for environmental hygiene services projects; (ii) decrease of HK$24.6 million in the prepayments for acquisition of land use rights for hazardous waste treatment business projects; and (iii) decrease of HK$22.0 million in the prepayments for acquisition of property, plant and equipment.

Trade and bills payables

Trade and bills payables mainly represented payables due to third parties for the procurement of raw materials used for Group's hazardous waste treatment business and fuel used by Group's mechanized vehicles and other consumables used for environmental hygiene services. The increase was mainly due to the increase in procurement as a result of the continuous business expansion in environmental hygiene services business.

Other payables and accruals

Other payables and accruals mainly represented payable for acquisition of property, plant and equipment, accruals for the Group's expenses and lease liabilities. The increase was mainly due to the addition of payables for acquisition of property, plant and equipment during the period.

Interest-bearing bank and other borrowings

Decrease in bank and other borrowings was mainly due to repayment of bank borrowings during the six months ended 30 June 2020.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

11

MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)

Liquidity and financial resources

The Group adopts conservative treasury policies and controls tightly over its cash and risk management. The Group's cash and cash equivalents are mainly denominated in Hong Kong dollars ("HK$") and Renminbi ("RMB"). Surplus cash is generally placed in short-term deposits denominated in HK$ and RMB.

As at 30 June 2020, the Group's cash and cash equivalents amounted to approximately HK$1,387.3 million (31 December 2019: approximately HK$1,051.9 million).

The Group's bank and other borrowings amounted to HK$1,251.2 million (31 December 2019: HK$1,389.8 million). Over 90% of bank and other borrowings bear interest at floating rates.

As at 30 June 2020, the Group had indebtedness in the form of interest-bearing bank and other borrowings to support the Group's working capital needs. The table below sets out a breakdown of the Group's overall indebtedness as at the dates indicated:

30 June

31 December

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Secured bank loans

823,686

741,962

Unsecured bank loans

371,587

587,452

Secured other loans

45,510

54,517

Unsecured other loans

10,444

5,850

Total

1,251,227

1,389,781

As at 30 June 2020, the Group had net-cash on hand whereas the net gearing ratio (defined as bank and other borrowings, net of cash and cash equivalents, divided by the total equity) as at 31 December 2019 was 15.0%.

Capital expenditure

During the six months ended 30 June 2020, the Group's total capital expenditures were HK$513.9 million (six months ended 30 June 2019: HK$424.7 million), out of which HK$420.3 million and HK$93.6 million (six months ended 30 June 2019: HK$270.6 million and HK$84.4 million) were paid for the additions of property, plant and equipment and right-of-use assets, respectively. In addition, during the six months ended 30 June 2019, the Group paid HK$67.8 million and HK$1.9 million in respect of additions of operating concession and other intangible assets, respectively.

FUTURE OUTLOOK

Looking forward, the ongoing COVID-19 pandemic brings uncertainties to the PRC economic environment. Nevertheless, due to rapid implementations of contingency measures to control the spread of COVID-19 in the PRC, the operating environment is expected to improve considerably in the second half of 2020.

In respect of the Group's environmental hygiene services business, the Group intends to participate in more tendering process for new projects, expand into new markets and seek the opportunities to expand the services to certain related business areas, such as recycling, sorting, greenway maintenance and reuse of municipal waste as a result of increasing urbanization in China and privatization of environmental hygiene service. In addition, the Group will strategically look for projects located in areas where the Group has established similar projects or in adjacent areas so that the Group can make good use of its knowledge of the local areas and business advantages.

Although the Group's hazardous waste treatment services business was adversely affected in the first few months of 2020 due to the outbreak of the COVID-19 pandemic, a trend of improving business was noted in the second and third quarter of 2020. The effective control measures taken by the PRC government have lead to the recovery of the economy and it is expected that the recovery trend will continue in the second half of 2020.

12

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)

USE OF PROCEEDS FROM LISTING

On 15 January 2020 (the "Listing Date"), 900,000,000 new ordinary shares with a par value of HK$0.1 each of the Company were issued at a price of HK$0.69 by way of share offer and the Company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The net proceeds from the share offer (after deducting listing expenses) amounted to approximately HK$603.4 million (the "IPO Proceeds"). The IPO Proceeds are intended to be applied in accordance with the proposed application as set out in the prospectus of the Company dated 30 December 2019. Up to 30 June 2020, the IPO Proceeds were utilised according to the intentions previously disclosed by the Company as follows:

Expected

Actual amount

timeline for

utilised from

Unutilised

utilising the

Intended use

Listing Date to

amount as at

unutilised

of proceeds

30 June 2020

30 June 2020

amount

HK$ million

HK$ million

HK$ million

Purchase of equipment and facilities for

hazardous waste treatment projects

- Incineration system

191.1

20.3

170.8

- Wastewater and liquid waste flocculation

and purification system

11.2

2.8

8.4

- Deodorization system

13.4

-

13.4

Before end

Sub-total

215.7

23.1

192.6

of 2021

Construction of buildings for hazardous

waste treatment projects

- Factory plants

78.7

78.7

-

- Office buildings

11.3

11.3

-

Sub-total

90.0

90.0

-

N/A

Purchase of garbage trucks for

environmental hygiene services projects

97.9

97.9

-

N/A

Repayment of a bank borrowing in

Hong Kong

150.0

150.0

-

N/A

Before end

General working capital

49.8

12.5

37.3

of 2020

Total

603.4

373.5

229.9

The unutilised IPO Proceeds were deposited with licensed banks in Hong Kong and the PRC.

CHARGES ON THE GROUP'S ASSETS

The secured bank and other borrowings of the Group as at 30 June 2020 are secured by:

  1. pledges over the Group's equity interest in subsidiaries and a non-controlling shareholder's equity interest in a subsidiary as at 30 June 2020 and 31 December 2019; and
  2. pledges over certain of the Group's property, plant and equipment, right-of-use assets and operating concession rights as at 30 June 2020 and 31 December 2019.

Save as disclosed above, as at 30 June 2020, the Group did not have any charges on the Group's assets.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

13

MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)

CONTINGENT LIABILITIES

As at the end of the Reporting Period, the Group did not have any significant contingent liabilities (31 December 2019: Nil).

FOREIGN EXCHANGE EXPOSURE

Majority of the subsidiaries of the Company operate in the PRC with most of the transactions denominated and settled in RMB. Fluctuations of exchange rates would impact the Group's net asset value due to currency translation in the preparation of the Group's consolidated accounts. If RMB appreciates/depreciates against HK$, the Group would record a(n) increase/decrease in the Group's net asset value. During the six months ended 30 June 2020, the Group has not used derivative financial instruments to hedge against its foreign currency risk.

EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2020, the Group employed 36,094 employees (30 June 2019: 32,071 employees) with total staff cost of approximately HK$592.8 million incurred for the six months ended 30 June 2020 (six months ended 30 June 2019: approximately HK$551.9 million). The Group's remuneration packages are generally structured with reference to market terms and individual merits. Salaries are normally reviewed on an annual basis based on performance appraisals and other relevant factors.

SIGNIFICANT INVESTMENTS, MATERIAL ACQUISITION AND DISPOSAL OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

There were no significant investments, material acquisition and disposal of subsidiaries, associates and joint ventures by the Group for the six months ended 30 June 2020 and there was no plan authorised by the Board for material investments or additions of capital assets up to the date of interim report.

INTERIM DIVIDEND

The Board does not recommend the payment of any interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: Nil).

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the listed securities of the Company from the Listing Date to 30 June 2020.

IMPORTANT EVENT AFFECTING THE GROUP AFTER THE REVIEW PERIOD

There was no other important event affecting the Group since 30 June 2020 and up to the date of this report.

14

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 June 2020

For the six months

ended 30 June

2019

2020

HK$'000

HK$'000

Notes

(Unaudited)

(Audited)

(Restated)

CONTINUING OPERATIONS

REVENUE

3

1,546,002

1,287,074

Cost of sales

(1,038,058)

(917,372)

Gross profit

507,944

369,702

Other income and gains, net

3

29,304

30,312

Administrative expenses

(138,132)

(140,735)

Selling and distribution expenses

(6,222)

(4,355)

Other expenses

(5,890)

(5,320)

Finance costs

5

(36,177)

(33,494)

Share of profit/(loss) of a joint venture

2,326

(698)

PROFIT BEFORE TAX FROM CONTINUING OPERATIONS

4

353,153

215,412

Income tax expense

6

(82,142)

(48,806)

PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS

271,011

166,606

Attributable to:

Owners of the parent

217,816

126,947

Non-controlling interests

53,195

39,659

271,011

166,606

DISCONTINUED OPERATION

Loss for the period from a discontinued operation

7

-

(12,260)

PROFIT FOR THE PERIOD

271,011

154,346

Attributable to:

Owners of the parent

217,816

120,694

Non-controlling interests

53,195

33,652

271,011

154,346

EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF

THE COMPANY

8

Basic and diluted (HK cents)

For profit for the period

HK6.17 cents

HK4.47 cents

For profit from continuing operations

HK6.17 cents

HK4.70 cents

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

15

CONDENSED CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

For the six months ended 30 June 2020

For the six months

ended 30 June

2019

2020

HK$'000

HK$'000

(Unaudited)

(Audited)

(Restated)

PROFIT FOR THE PERIOD

271,011

154,346

Other comprehensive loss that may be reclassified to profit or loss

in subsequent periods:

Exchange differences:

- Exchange differences on translation of foreign operations

(68,772)

(5,395)

- Reclassification adjustments for a foreign operation disposed of during

the period

-

(38)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

202,239

148,913

Attributable to:

Owners of the parent

155,034

110,387

Non-controlling interests

47,205

38,526

202,239

148,913

16

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

CONDENSED CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

30 June 2020

30 June

31 December

2020

2019

HK$'000

HK$'000

Notes

(Unaudited)

(Audited)

NON-CURRENT ASSETS

Property, plant and equipment

10

2,010,091

1,748,584

Right-of-use assets

405,603

334,519

Goodwill

273,716

279,586

Operating concessions

109,035

114,006

Other intangible assets

2,132

2,490

Prepayments, deposits and other receivables

73,611

115,379

Investment in a joint venture

33,738

32,144

Trade receivables

11

65,578

24,663

Contract assets

5,282

42,388

Deferred tax assets

9,986

6,700

Total non-current assets

2,988,772

2,700,459

CURRENT ASSETS

Inventories

67,834

44,733

Trade and bills receivables

11

829,427

775,332

Environmental decommissioning fees receivable

12

248,504

219,460

Contract assets

4,108

3,513

Other tax recoverable

112,242

66,693

Prepayments, deposits and other receivables

59,824

84,606

Due from related companies

9,404

3,233

Due from non-controlling shareholders

17,736

22,679

Pledged deposits

14,275

14,596

Cash and cash equivalents

1,387,268

1,051,896

Total current assets

2,750,622

2,286,741

TOTAL ASSETS

5,739,394

4,987,200

CURRENT LIABILITIES

Trade and bills payables

13

194,976

160,529

Other payables and accruals

864,376

825,663

Other taxes payable

2,464

22,623

Income tax payable

64,536

42,948

Due to related companies

1,941

1,876

Interest-bearing bank and other borrowings

14

569,602

563,950

Total current liabilities

1,697,895

1,617,589

NET CURRENT ASSETS

1,052,727

669,152

TOTAL ASSETS LESS CURRENT LIABILITIES

4,041,499

3,369,611

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

17

CONDENSED CONSOLIDATED STATEMENT OF

FINANCIAL POSITION (CONTINUED)

30 June 2020

30 June

31 December

2020

2019

HK$'000

HK$'000

Notes

(Unaudited)

(Audited)

NON-CURRENT LIABILITIES

Deferred income

167,909

147,712

Other payables and accruals

121,887

116,526

Deferred tax liabilities

22,081

16,829

Interest-bearing bank and other borrowings

14

681,625

825,831

Provision for major overhaul

5,162

5,155

Total non-current liabilities

998,664

1,112,053

Net assets

3,042,835

2,257,558

EQUITY

Equity attributable to owners of the parent

Share capital

15

360,000

270,000

Reserves

2,195,261

1,543,820

2,555,261

1,813,820

Non-controlling interests

487,574

443,738

Total equity

3,042,835

2,257,558

18

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

CONDENSED CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY

Six months ended 30 June 2020

Attributable to owners of the parent

Exchange

PRC

Non-

Issued

Share

Capital

Merger

fluctuation

reserve

Retained

controlling

Total

capital

premium

reserve

reserve

reserve

funds

profits

Total

interests

equity

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

At 1 January 2019

-

-

(2,936)

1,347,830

(35,944)

34,781

211,745

1,555,476

589,034

2,144,510

Profit for the period (audited)

-

-

-

-

-

-

120,694

120,694

33,652

154,346

Other comprehensive loss for the period:

Exchange differences on translation of

foreign operations (audited)

-

-

-

-

(10,269)

-

-

(10,269)

4,874

(5,395)

Reclassification adjustments for a foreign operation

disposed of during the period (audited)

-

-

-

-

(38)

-

-

(38)

-

(38)

Total comprehensive income/(loss) for the

period (audited)

-

-

-

-

(10,307)

-

120,694

110,387

38,526

148,913

Capital contribution from non-controlling

shareholders (audited)

-

-

-

-

-

-

-

-

11,794

11,794

Transfer between reserves (audited)

-

-

-

-

-

15,103

(15,103)

-

-

-

Issue of shares (audited)

1,350,000

-

-

(1,350,000)

-

-

-

-

-

-

Capital reduction (audited)

(1,080,000)

-

1,080,000

-

-

-

-

-

-

-

Acquisition of non-controlling interests (audited)

-

-

(4,890)

-

-

-

-

(4,890)

(21,863)

(26,753)

Disposal of subsidiaries (audited)

-

-

-

-

-

-

-

-

(80,481)

(80,481)

At 30 June 2019

270,000

-

1,072,174

(2,170)

(46,251)

49,884

317,336

1,660,973

537,010

2,197,983

At 1 January 2020

270,000

-

1,076,069

(2,170)

(52,978)

86,789

436,110

1,813,820

443,738

2,257,558

Profit for the period (unaudited)

-

-

-

-

-

-

217,816

217,816

53,195

271,011

Other comprehensive income/(loss) for the period:

Exchange differences on translation of

foreign operations (unaudited)

-

-

-

-

(62,782)

-

-

(62,782)

(5,990)

(68,772)

Total comprehensive income/(loss) for the period

(unaudited)

-

-

-

-

(62,782)

-

217,816

155,034

47,205

202,239

Capital contributions from non-controlling

shareholders (unaudited)

-

-

-

-

-

-

-

-

3,622

3,622

Capital reductions from non-controlling

shareholders (unaudited)

-

-

-

-

-

-

-

-

(4,444)

(4,444)

Issue of new shares pursuant to the Share Offer

(unaudited) (note 15)

90,000

531,000

-

-

-

-

-

621,000

-

621,000

Share issue expenses (unaudited)

-

(33,564)

-

-

-

-

-

(33,564)

-

(33,564)

Acquisition of non-controlling interests (unaudited)

-

-

(1,029)

-

-

-

-

(1,029)

(2,547)

(3,576)

Transfer between reserves (unaudited)

-

-

-

-

-

23,002

(23,002)

-

-

-

At 30 June 2020 (unaudited)

360,000

497,436*

1,075,040*

(2,170)*

(115,760)*

109,791*

630,924*

2,555,261

487,574

3,042,835

  • These reserve accounts comprise the consolidated reserves of HK$2,195,261,000 (unaudited) (31 December 2019: HK$1,543,820,000 (audited)) in the condensed consolidated statements of financial position as at 30 June 2020.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

19

CONDENSED CONSOLIDATED STATEMENT OF

CASH FLOWS

Six months ended 30 June 2020

Six months ended 30 June

2019

2020

HK$'000

HK$'000

(Unaudited)

(Audited)

OPERATING ACTIVITIES

Cash generated from operations

437,649

237,864

Corporate income tax paid in the People's Republic of China

(the "PRC" or "Mainland China")

(58,964)

(36,591)

Net cash flows from operating activities

378,685

201,273

INVESTING ACTIVITIES

Purchases of items of property, plant and equipment

(364,001)

(330,721)

Proceeds from disposal items of property, plant and equipment

3,120

43,179

Proceed from disposal of a right-of-use asset

-

1,329

Additions to other intangible assets

(9)

(1,923)

Additions of right-of-use assets

(41,643)

(2,850)

Additions of operating concessions

-

(67,767)

Repayments from related companies and non-controlling shareholders

-

433,020

Settlement of acquisition consideration payable

(50,333)

(52,150)

Disposal of subsidiaries

-

(7,029)

Decrease in pledged deposits

321

3,693

Increase in time deposits with maturity of more than three months when acquired

-

(912)

Interest received

8,274

6,138

Net cash flows from/(used in) investing activities

(444,271)

24,007

FINANCING ACTIVITIES

Capital contributions from non-controlling shareholders

3,622

11,794

Proceed from issue of shares, net

603,408

-

New bank and other borrowings

284,016

140,023

Repayments of bank and other borrowings

(409,107)

(151,369)

Principal portion of lease payments

(18,328)

(16,886)

Advances from related companies and non-controlling shareholders

773

5,210

Repayments to related companies and non-controlling shareholders

-

(11,922)

Interest paid

(31,814)

(30,201)

Acquisition of non-controlling interests

(3,576)

(26,753)

Net cash flows from/(used in) financing activities

428,994

(80,104)

Net increase in cash and cash equivalents

363,408

145,176

Cash and cash equivalents at beginning of period

1,051,896

677,249

Effect of foreign exchange rate changes, net

(28,036)

6,124

Cash and cash equivalents at end of period

1,387,268

828,549

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS

Cash and cash equivalents as stated in the condensed consolidated

statements of financial position

1,387,268

886,526

Less: Time deposit with maturity of more than three months when acquired

-

(57,977)

Cash and cash equivalents as stated in the condensed consolidated

statements of cash flows

1,387,268

828,549

Note: Net cash flows from operating activities from continuing operations were HK$378,685,000 for the period ended 30 June 2020. Net cash flows from operating activities from continuing operations was HK$205,752,000 for the period ended 30 June 2019.

Net cash flows used in operating activities from discontinued operations were nil for the period ended 30 June 2020. Net cash flows used in operating activities from discontinued operations was HK$4,479,000 for the period ended 30 June 2019.

20

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION

30 June 2020

1.1 CORPORATE INFORMATION

The Company is an exempted company with limited liability incorporated in the Cayman Islands. The registered office address of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands.

In January 2020, the Company completed the global offering and listing of its shares on the Main Board of the Stock Exchange and dealings of the Company's shares on the Stock Exchange commenced on 15 January 2020.

The Company is an investment holding company. During the Reporting Period, the Group was involved in the following principal activities:

  • provision of environmental hygiene services
  • provision of hazardous waste treatment services
  • provision of waste electrical, electronic equipment treatment services and sale of dismantled products

1.2 BASIS OF PREPARATION

This unaudited interim condensed consolidated financial information of the Group for the six months ended 30 June 2020 has been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules") and Hong Kong Accounting Standard ("HKAS") 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"). It is unaudited but has been reviewed by the audit committee of the Company (the "Audit Committee").

The unaudited interim condensed consolidated financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2019.

The accounting policies and basis of preparation adopted in the preparation of the unaudited interim condensed consolidated financial information are consistent with those adopted in the Group's annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") (which include all Hong Kong Financial Reporting Standards, HKASs and Interpretations) issued by the HKICPA, except for the adoption of the new and revised HKFRSs as disclosed in note 1.3 below.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

21

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

1.3 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019, except for the adoption of the following revised HKFRSs for the first time for the current period's financial information.

Amendments to HKFRS 3

Amendments to HKFRS 9, HKAS 39 and HKFRS 7 Amendment to HKFRS 16

Amendments to HKAS 1 and HKAS 8

Definition of a Business

Interest Rate Benchmark Reform COVID-19-Related Rent Concessions (early adopted) Definition of Material

The nature and impact of the revised HKFRSs are described below:

  1. Amendments to HKFRS 3 clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group has applied the amendments prospectively to transactions or other events that occurred on or after 1 January 2020. The amendments did not have any impact on the financial position and performance of the Group.
  2. Amendments to HKFRS 9, HKAS 39 and HKFRS 7 address the effects of interbank offered rate reform on financial reporting. The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments did not have any impact on the financial position and performance of the Group as the Group does not have any interest rate hedge relationships.

22

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

1.3 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)

  1. Amendment to HKFRS 16 provides a practical expedient for lessees to elect not to apply lease modification accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. The practical expedient applies only to rent concessions occurring as a direct consequence of the COVID-19 pandemic and only if (i) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change; (ii) any reduction in lease payments affects only payments originally due on or before 30 June 2021; and (iii) there is no substantive change to other terms and conditions of the lease. The amendment is effective retrospectively for annual periods beginning on or after 1 June 2020 with earlier application permitted. The amendments did not have any impact on the financial position and performance of the Group.
  2. Amendments to HKAS 1 and HKAS 8 provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information. The amendments did not have any impact on the Group's interim condensed consolidated financial information.

2. OPERATING SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services and has three reportable operating segments as follows:

  1. the environmental hygiene services segment provides city cleaning and public hygiene services;
  2. the hazardous waste treatment segment provides hazardous waste treatment services; and
  3. the "others" segment comprise, principally, the waste electrical and electronic equipment treatment services and the sale of dismantled products.

Management monitors the results of the Group's operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment profit, which is a measure of adjusted profit for the period from continuing operations attributable to owners of parent. The adjusted profit for the period from continuing operations attributable to owners of parent is measured consistently with the Group's profit for the period from continuing operations attributable to owners of parent except that corporate and other unallocated income and expenses are excluded from such measurement.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

23

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

2. OPERATING SEGMENT INFORMATION (Continued)

Environmental

Hazardous

hygiene services

waste treatment

Others

Total

2020

2019

2020

2019

2020

2019

2020

2019

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

(Unaudited)

(Audited)

(Unaudited)

(Audited)

(Unaudited)

(Audited)

(Unaudited)

(Audited)

(Restated)

(Restated)

(Restated)

(Restated)

Segment revenue (note 3):

1,266,068

906,640

193,423

277,213

86,511

103,221

1,546,002

1,287,074

Cost of sales

(862,885)

(688,230)

(116,442)

(155,291)

(58,731)

(73,851)

(1,038,058)

(917,372)

Gross profit

403,183

218,410

76,981

121,922

27,780

29,370

507,944

369,702

Segment results

321,845

133,991

53,336

96,737

22,650

19,614

397,831

250,342

Corporate and other unallocated income and

expenses, net:

Interest income

29

854

Other corporate gains

29

4,841

Finance costs

(10,207)

(11,207)

Corporate and other unallocated expenses

(34,529)

(29,418)

(44,678)

(34,930)

Profit before tax from continuing operations

353,153

215,412

Income tax expense

(82,142)

(48,806)

Profit for the period from continuing operations

271,011

166,606

Segmental profit for the period from

continuing operations

251,045

99,717

44,088

84,183

20,556

17,636

315,689

201,536

Non-controlling interests

(39,894)

(13,565)

(4,777)

(19,054)

(8,524)

(7,040)

(53,195)

(39,659)

Owners of the parent

211,151

86,152

39,311

65,129

12,032

10,596

262,494

161,877

Corporate and other unallocated income and

expenses, net

(44,678)

(34,930)

217,816

126,947

Other segment information:

Share of profit/(loss) of a joint venture

-

-

2,326

(698)

-

-

2,326

(698)

Impairment losses/(reversal of impairment losses)

recognised in the statement of

profit or loss, net

-

(360)

(1,086)

99

64

-

(1,022)

(261)

Depreciation and amortisation

96,426

54,982

32,569

42,850

3,441

4,038

132,436

101,870

Investment in a joint venture

-

-

33,738

32,144

-

-

33,738

32,144

Capital expenditure*

352,051

259,643

161,050

161,668

762

3,393

513,863

424,704

  • Capital expenditure consists of additions to property, plant and equipment, right-of-use assets, operating concessions and other intangible assets.

24

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

2. OPERATING SEGMENT INFORMATION (Continued)

Geographical information

  1. All of the Group's revenue from continuing operations from external customers was derived from the Group's operations in the PRC during the period.
  2. Over 90% of the Group's non-current assets from continuing operations were derived from the Group's operations in the PRC during the period.

Information about major customers

During the six months ended 30 June 2020 and 2019, no revenue from transactions with a single external customer contributed over 10% to the total revenue of the Group.

3. REVENUE, OTHER INCOME AND GAINS, NET

An analysis of revenue, other income and gains, net is as follows:

For the six months

ended 30 June

2019

2020

HK$'000

HK$'000

Notes

(Unaudited)

(Audited)

(Restated)

Revenue from contract customers

Environmental hygiene services businesses

- Environmental hygiene services

(a)

1,256,574

906,640

- Construction services

(a)

9,494

-

1,266,068

906,640

Hazardous waste treatment businesses

- Hazardous waste treatment services

(a)

114,471

131,483

- Sale of refined chemical and other products

(a)

78,952

145,730

193,423

277,213

Sale of dismantled products

(a)

35,302

51,694

1,494,793

1,235,547

Revenue from other source

Environmental decommissioning fees income

51,209

51,527

1,546,002

1,287,074

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

25

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

3. REVENUE, OTHER INCOME AND GAINS, NET (Continued)

For the six months

ended 30 June

2019

2020

HK$'000

HK$'000

Notes

(Unaudited)

(Audited)

(Restated)

Other income and gains, net

Interest income

8,274

6,033

Foreign exchange differences, net

2,242

71

Government grants

(b)

7,348

3,060

VAT refunds

(c)

6,729

11,534

Consultancy services provided

(a)

857

5,907

Gain on disposal of subsidiaries

-

2,841

Others

3,854

866

29,304

30,312

Notes:

  1. Disaggregated revenue information
    Environmental hygiene services and construction services are recognised over time. Hazardous waste treatment services, sale of refined chemical and other products, sale of dismantled products and consultancy services are recognised at a point in time.
    Please refer to note 2 to the financial information for the disclosure on disaggregated revenue for details.
  2. The government grants recognised during the period represented grants received from certain government authorities. There are no unfulfilled conditions or contingencies relating to these grants.
  3. Certain subsidiaries are entitled to a refund of 50% to 70% of the net VAT paid/payable under the Catalogue of Products and Services related to Recycling Businesses Qualified for Value-Added Tax (VAT) Preferential Treatment (Caishui [2015] No. 78) jointly issued by the PRC State Administration of Taxation and the Ministry of Finance.

26

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

4. PROFIT BEFORE TAX FROM CONTINUING OPERATIONS

The Group's profit before tax from continuing operations is arrived at after charging/(crediting):

For the six months

ended 30 June

2019

2020

HK$'000

HK$'000

(Unaudited)

(Audited)

(Restated)

Cost of inventories sold

113,319

153,282

Cost of services provided

919,375

761,496

Depreciation of property, plant and equipment

109,709

85,499

Depreciation of right-of-use assets

17,056

13,592

Amortisation of intangible assets

307

185

Amortisation of operating concessions*

5,364

2,594

Reversal of impairment losses of trade receivables, net

(1,022)

(261)

Write-down of inventories to net realisable value

2,285

3,263

Gain on disposal of items of property, plant and equipment

(29)

(540)

Employee benefit expense (excluding directors' and

chief executive's remuneration):

Salaries and benefits in kind

549,178

465,369

Pension scheme contributions

43,646

86,507

592,824

551,876

  • Included in "Cost of sales" in the condensed consolidated statements of profit or loss.

5. FINANCE COSTS

For the six months

ended 30 June

2019

2020

HK$'000

HK$'000

(Unaudited)

(Audited)

(Restated)

Interest on bank borrowings

30,593

28,914

Interest on other loans

2,278

3,792

Interest on lease liabilities

4,242

3,618

Total interest on bank and other borrowings

37,113

36,324

Increase in discounted amounts of provision for major overhaul

arising from the passage of time

121

120

Total finance costs

37,234

36,444

Less: Interest capitalised

(1,057)

(2,950)

36,177

33,494

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

27

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

6. INCOME TAX

No provision for Hong Kong profits tax has been made during the six months ended 30 June 2020 as the Group did not generate any assessable profits in Hong Kong during the period (six months ended 30 June 2019: Nil).

The income tax provisions in respect of operations in Mainland China are calculated at the applicable tax rates on the estimated assessable profits for the period based on existing legislation, interpretations and practices in respect thereof. In accordance with the relevant tax rules and regulations of Mainland China, a number of the Company's subsidiaries enjoy income tax exemptions and reductions, by reasons that (1) these companies are engaged in the operations of environmental protection, energy and water conservation; and/or (2) they have operations in the Western region of Mainland China that are qualified for a 15% concessionary corporate income tax rate for a prescribed period of time pursuant to the "Circular of the State Council on Policies and Measures Concerning the Large-scale Development of China's Western Regions" (Guo Fa [2000] No. 33) issued by the State Council of Mainland China.

For the six months

ended 30 June

2019

2020

HK$'000

HK$'000

(Unaudited)

(Audited)

(Restated)

Current - Mainland China charge for the period

81,747

48,988

Deferred

395

(182)

Total tax charge for the period from continuing operations

82,142

48,806

Total tax charge for the period from a discontinued operation

-

-

82,142

48,806

7. DISCONTINUED OPERATION

Pursuant to an equity interest transfer agreement entered into between the Group, Beijing Enterprises Binnan (Chongqing) Urban Services Company Limited (北控濱南(重慶)城市綜合服務股份有限公司) ("Binnan Group") and the non-controlling shareholders of Binnan Group, on 30 August 2019, the Group agreed to sell its 51% equity interest in Binnan Group to the non-controlling shareholder for a cash consideration of approximately RMB75.3 million. The disposal was completed on 21 October 2019. Accordingly, the condensed consolidated statement of profit or loss and the condensed consolidated statement of cash flows have been presented consistently for the discontinued operation throughout the period to conform with the presentation for the six months ended 30 June 2019.

The result of Binnan Group for the six months ended 30 June 2019 is presented below:

For the

six months

ended

30 June

2019

HK$'000

(Audited)

Revenue

188,209

Cost of sales

(169,494)

Other income and gain

465

Administrative expenses

(27,897)

Other expenses

(248)

Finance costs

(3,295)

Loss for the period from a discontinued operation

(12,260)

28

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

7. DISCONTINUED OPERATION (Continued)

The net cash flows incurred by Binnan Group for the period are as follows:

For the

six months

ended

30 June

2019

HK$'000

(Audited)

Operating activities

(4,479)

Investing activities

16,627

Financing activities

(41,801)

Net cash outflow

(29,653)

8. EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY

The calculation of basic earnings per share amounts is based on the profit for the six months ended 30 June 2020 attributable to shareholders of the Company and the profit from continuing operations attributable to shareholders of the Company, and the weighted average number of ordinary shares of 3,530,769,231 in issue during the six months ended 30 June 2020 (the weighted average number of ordinary shares of 2,700,000,000 used for the six months ended 30 June 2019 has assumed that the issue of new shares (note 15) of the Company had been completed on 1 January 2019).

The Group had no potential dilutive ordinary shares in issue during the six months ended 30 June 2020 and 2019.

The calculation of the basic and diluted earnings per share amounts are based on the followings:

For the six months

ended 30 June

20202019

HK$'000 HK$'000

(Unaudited) (Audited) (Restated)

Earnings

  1. For profit for the period:

Profit for the period attributable to shareholders of the Company,

used in the basic and diluted earnings per share calculations

217,816

120,694

(ii)

For profit for the period from continuing operations:

Profit for the period from continuing operations attributable to

shareholders of the Company, used in the basic and diluted

earnings per share calculations

217,816

126,947

Number of ordinary shares

Weighted average number of ordinary shares, used in the basic and

diluted earnings per share calculations

3,530,769,231

2,700,000,000

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

29

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

9. DIVIDEND

No dividend was paid or proposed during the six months ended 30 June 2020 nor has any dividend been proposed since the end of the Reporting Period up to the date of this unaudited interim condensed consolidated financial information (six months ended 30 June 2019: Nil).

10. PROPERTY, PLANT AND EQUIPMENT

During the period, the Group's additions of property, plant and equipment amounted to HK$420,265,000 (six months ended 30 June 2019: HK$278,534,000). There were disposals of property, plant and equipment with an aggregate carrying amount of HK$3,091,000 (six months ended 30 June 2019: HK$42,639,000) during the six months ended 30 June 2020.

11. TRADE AND BILLS RECEIVABLES

30 June

31 December

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Trade receivables

895,050

802,140

Less: impairment

(1,474)

(2,541)

893,576

799,599

Bills receivables

1,429

396

895,005

799,995

Portion classified as current assets

(829,427)

(775,332)

Non-current portion

65,578

24,663

The Group's trading terms with its customers are mainly on credit, except for new customers, where payment in advance is normally required. The credit period is generally one month, extending up to three months for major customers. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group's trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non- interest-bearing.

30

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

11. TRADE AND BILLS RECEIVABLES (Continued)

An ageing analysis of the trade receivables as at the end of the Reporting Period, based on the invoice date or revenue recognition date (when the invoices had yet been issued by then) and net of loss allowance, is as follows:

30 June

31 December

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Within 1 month

311,588

343,293

1 to 2 months

167,630

117,803

2 to 3 months

115,259

65,349

Over 3 months

233,521

248,491

827,998

774,936

Unbilled*

65,578

24,663

893,576

799,599

  • The unbilled balance was attributable to certain construction services which will be billed in accordance with the repayment terms stipulated in relevant construction services agreements entered into between the Group and the contract customers.

12. ENVIRONMENTAL DECOMMISSIONING FEES RECEIVABLE

30 June

31 December

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Environmental decommissioning fees receivable

248,504

219,460

The balance represented government subsidies receivable from the Central Government of the People's Republic of China for the waste electrical and electronic equipment treatment services. The Group submits the quantities and products dismantled to the government online system on a weekly basis. The Central Government would appoint independent auditors to perform fieldwork audit quarterly or semi-annually, depending on the province practice, to verify the submitted details in the online system posted by the dismantling entities. Audit report would be issued by the independent auditors and submitted to the Central Government for the quantities confirmation results. Subject to the internal procedures for processing the auditor reports, the Central Government would publish online confirmation notices on its website the quantities of dismantling appliance and an environmental decommissioning fee would be paid to the entities after the online publication. The whole confirmation process from performing the waste electrical and electronic equipment treatment services until the cash receipt from Central Government ranged from 3 to 4 years.

The Group does not hold any collateral over these balances.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

31

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

13. TRADE AND BILLS PAYABLES

30 June

31 December

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Trade payables

162,009

126,821

Bills payable

32,967

33,708

194,976

160,529

An ageing analysis of the trade payables as at the end of the Reporting Period, based on the invoice date, is as follows:

30 June

31 December

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Within 1 month

110,644

89,516

1 to 2 months

4,347

3,899

2 to 3 months

15,853

3,738

Over 3 months

31,165

29,668

162,009

126,821

The trade payables are non-interest-bearing and are normally settled on terms of 30 to 90 days.

14. INTEREST-BEARING BANK AND OTHER BORROWINGS

30 June

31 December

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Secured bank loans

823,686

741,962

Unsecured bank loans

371,587

587,452

Secured other loans

45,510

54,517

Unsecured other loans

10,444

5,850

Total bank and other borrowings

1,251,227

1,389,781

Portion classified as current liabilities

(569,602)

(563,950)

Non-current portion

681,625

825,831

32

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

15. SHARE CAPITAL

30 June

31 December

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Authorised:

30,000,000,000 ordinary shares of HK$0.1 each

3,000,000

3,000,000

Issued and fully paid:

3,600,000,000 (31 December 2019: 2,700,000,000) ordinary shares

of HK$0.1 each

360,000

270,000

The movements in the Company's share capital during the period from 26 March 2019 (date of incorporation) to 30 June 2020 were as follows:

Number

of ordinary

Nominal value

shares of

of ordinary

HK$0.1 each

shares

Notes

HK$'000

Authorised:

At 26 March 2019 (date of incorporation), 31 December 2019

and 30 June 2020

(i)

30,000,000,000

3,000,000

Number

Share

of shares

capital of

in issue

HK$0.1 each

HK$'000

Issue and fully paid:

At 26 March 2019 (date of incorporation), and 31 December 2019

(ii)

2,700,000,000

270,000

Issue of new shares pursuant to the Share Offer

(iii)

900,000,000

90,000

At 30 June 2020

3,600,000,000

360,000

Notes:

  1. The Company was incorporated as an exempted company with limited liability in the Cayman Islands on 26 March 2019 with authorised share capital of HK$3,000,000,000 divided into 30,000,000,000 shares of HK$0.10 each. On the date of its incorporation, one share was allotted and issued by the Company to the initial subscriber for cash at par who subsequently transferred the share to Beijing Enterprises Water Group Limited ("BEWG") on the same day.
  2. On 26 March 2019, 13,499,999,999 ordinary shares of HK$0.10 each were allotted and issued as nil-paid to the then shareholders of Mind Light Holdings Limited ("Mind Light"), the then ultimate holding company of the Group.
    On 26 March 2019, the Company acquired all the issued shares of Mind Light from its respective shareholders. In consideration of the acquisition, the 13,500,000,000 shares of the Company held by each of the then shareholders were all credited as fully paid on 26 March 2019.
    Pursuant to a shareholders' resolution dated 15 April 2019 and a directors' resolution dated 15 April 2019, a total of 10,800,000,000 shares were surrendered by the then shareholders, which were subsequently cancelled. Upon completion of the surrender of shares, the issued share capital of the Company became HK$270,000,000 representing 2,700,000,000 shares of HK$0.1 each and the shareholding percentages held by each of the then shareholders remained the same.
  3. In connection with the listing of shares of the Company on the Main Board of the Stock Exchange (the "Share Offer"), 900,000,000 new ordinary shares of HK$0.1 each were issued at a price of HK$0.69 per share for a total cash consideration, before expenses, of HK$621,000,000. Dealings in the shares of the Company on the Stock Exchange commenced on 15 January 2020.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

33

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

16. DISPOSAL OF SUBSIDIARIES

Six months ended 30 June 2019

HK$'000

Net assets disposed of:

Property, plant and equipment

169,960

Goodwill

56,027

Right-of-use assets

19,297

Intangible assets

205

Tax recoverable

1,660

Other taxes recoverable

4,014

Long term prepayments

2,049

Inventories

11,046

Trade receivables

5,676

Prepayments, deposits and other receivables

10,981

Cash and cash equivalents

7,029

Deferred income

(9,877)

Trade payables

(8,711)

Other payables and accruals

(72,409)

Bank and other borrowings

(64,636)

Deferred tax liabilities

(12,273)

Non-controlling interests

(80,481)

39,557

Exchange fluctuation reserve realised

(38)

Gain on disposal of subsidiaries (note 3)

2,841

42,360

Satisfied by:

Offsetting of current accounts with the acquirees

42,360

An analysis of the net outflow of cash and cash equivalents in respect of the disposal of subsidiaries is as follows:

HK$'000

Cash and cash equivalents disposed of

(7,029)

Net outflow of cash and cash equivalents in respect of the disposal of subsidiaries

(7,029)

34

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

17. CAPITAL COMMITMENTS

The Group had the following capital commitments at the end of the Reporting Period:

30 June

31 December

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Contracted, but not provided for:

New service concession arrangement on BTO basis

36,347

-

Construction in progress

393,497

101,205

Plant and equipment

306,450

427,031

Prepaid land lease premium

-

10,787

736,294

539,023

18. RELATED PARTY TRANSACTIONS

  1. In addition to the transactions detailed elsewhere in the interim condensed consolidated financial information, the Group had the following transactions with related parties during the periods:

For the six months

ended 30 June

2019

2020

HK$'000

HK$'000

Notes

(Unaudited)

(Audited)

Related companies

Interest expenses

(i)

-

74

Interest income

(ii)

-

3,022

Costs of services provided#Ƴ

(ii)

2,957

2,097

Gain on disposal of items of property, plant and equipment

(iii)

-

588

Service incomeƳ

(iii)

8,226

3,139

Sale of uniforms and machinery

(iv)

1,248

871

  • These related party transactions also constitute continuing connected transactions that are exempted from the reporting, announcement and independent shareholders' approval requirement as defined in Chapter 14A of the Listing Rules.
  • These related party transactions also constitute connected transactions as defined in Chapter 14A of the Listing Rules.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

35

NOTES TO CONDENSED CONSOLIDATED

FINANCIAL INFORMATION (CONTINUED)

30 June 2020

18. RELATED PARTY TRANSACTIONS (Continued)

  1. (Continued)
    Notes:
    1. Interest expenses in 2019 mainly represented amounts paid to a subsidiary of BEWG.
    2. The transactions were based on terms mutually agreed between the Group and the related parties.
    3. The Group transferred certain items of property, plant and equipment for the provision of environmental hygiene services to a subsidiary of BEWG on 1 April 2019 at a cash consideration of HK$29 million. A disposal gain of HK$0.6 million arose from the transaction. The Group then immediately entered into an arrangement with the related company to provide entrusted operation service for this related party. For further details, please refer to the section headed "Connected Transactions" in the prospectus of the Company dated 30 December 2019. Amounts of HK$8.2 million and HK$3.1 million were recognised for the services provided for the six months ended 30 June 2020 and 2019, respectively.
    4. The amount represented income generated from the sale of uniforms and machinery for the provision of environmental hygiene services to a related company of BEWG.
    5. The Group leased office buildings from BEWG and its subsidiary. The financial impact of the lease was included in right-of-use assets and lease liabilities in the financial statements for the year/period ended 31 December 2019 and 30 June 2020.
  2. Compensation of key management personnel of the Group:

For the six months

ended 30 June

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Short term employee benefits

6,347

830

Post-employment benefits

75

140

Total compensation paid to key management personnel

6,422

970

Save as disclosed above, at 30 June 2020, the Group had no other material transactions and outstanding balances with related parties.

19. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

The carrying amounts of current financial assets and liabilities which are due to be received or settled within one year are reasonable approximation of their respective fair values largely due to the short term maturities of these instruments, and accordingly, no disclosure of the fair values of these financial instruments is made.

For non-current financial assets and liabilities, in the opinion of the directors of the Company, since their carrying amounts are not significantly different from their respective fair values, no disclosure of the fair values of these financial instruments is made.

20. COMPARATIVE AMOUNTS

As further explained in note 7 to the condensed consolidated financial information, the comparative condensed consolidated statement of profit or loss and other comprehensive income has been re-presented as if the operation discontinued during the prior period had been discontinued at the beginning of the comparative period.

21. APPROVAL OF THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION

These condensed consolidated financial information were approved and authorised for issue by the board of directors on 27 August 2020.

36

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

DISCLOSEABLE INFORMATION

DISCLOSURE OF INTERESTS

Directors' and Chief Executive's Interests and short positions in shares, underlying shares or debentures of the Company and its Associated Corporations

As at 30 June 2020, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the "SFO"), as recorded in the register maintained by the Company pursuant to Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to Part XV of the SFO or the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 of the Listing Rules, were as follows:

Long positions in the shares and/or underlying shares of the Company

Approximate

percentage of

the Company's

Personal

Family

Other

Issued Share

Name of Directors

interests

interests

Corporate interests

interests

Total

Capital

(Note 1)

Mr. Zhao Kexi

-

-

192,200,000

(Note 2)

-

192,200,000

5.34%

Mr. Zhang Hailin

-

-

192,200,000

(Note 2)

-

192,200,000

5.34%

Mr. Zhou Min

-

-

104,820,000

(Note 3)

-

104,820,000

2.91%

Mr. Li Haifeng

-

-

48,960,000

(Note 4)

-

48,960,000

1.36%

Notes:

  1. The approximate percentage was calculated on the basis of 3,600,000,000 shares in issue as of 30 June 2020.
  2. 192,200,000 shares were held by Shanghai Ziyue Enterprises Management Partnership (Limited Partnership) (上海自閱企業管理 合夥企業(有限合夥)) ("Shanghai Ziyue"), of which Mr. Zhao Kexi and Mr. Zhang Hailin are limited partners held as to 20.04% and 10.06% interests in Shanghai Ziyue. Therefore, Mr. Zhao Kexi and Mr. Zhang Hailin were deemed to have interests in those shares of the Company under the SFO.
  3. 104,820,000 shares were held by Star Colour Investments Limited ("Star Colour"), a company wholly-owned by Mr. Zhou Min. Accordingly, Mr. Zhou Min is deemed to have interests in those shares of Star Colour under the SFO.
  4. 48,960,000 shares were held by Maolin Investments Limited ("MIL"), a company wholly-owned by Mr. Li Haifeng. Accordingly, Mr. Li Haifeng is deemed to have interests in those shares of MIL under the SFO.

Save as disclosed above, as at 30 June 2020, none of the Directors or chief executive of the Company had any interests or short positions in the shares, the underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code or the SFO.

DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES

At no time during the six months ended 30 June 2020 were rights to acquire benefits by means of the acquisition of shares or shares in or debentures of the Company granted to any Director or their respective spouse or minor children, or were any such rights exercised by them; or was the Company or any of its subsidiaries a party to any arrangement to enable the Directors to acquire such rights in any other body corporate.

DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS

Save as disclosed in note 18 to the condensed consolidated financial information, no Directors nor a connected entity of a Director had a material interest, either directly or indirectly, in any transaction, arrangement or contract of significance to the business of the Group to which the Company or any of its subsidiaries was a party during the six months ended 30 June 2020.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

37

DISCLOSEABLE INFORMATION (CONTINUED)

SUBSTANTIAL SHAREHOLDERS' INTERESTS IN SHARES AND UNDERLYING SHARES

As at 30 June 2020, so far as was known to the Directors and chief executive of the Company, the following persons (other than the Directors and chief executive of the Company as disclosed above) had an interest or short position in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO:

Long position in the shares and/or underlying shares of the Company

Approximate

percentage of

the Company's

Capacity in which

Number of

issued Share

Name of shareholders

shares are held

shares held

capital

(Note 1)

Beijing Enterprises Group Company Limited

Interest of controlled corporation

1,009,600,000

28.04%

("BE Group") (Note 2)

Beijing Enterprises Group (BVI) Company

Interest of controlled corporation

1,009,600,000

28.04%

Limited ("BE BVI") (Note 2)

Beijing Enterprises Holdings Limited

Interest of controlled corporation

1,009,600,000

28.04%

("BEHL") (Note 2)

Beijing Enterprises Environmental Construction Interest of controlled corporation

1,009,600,000

28.04%

Limited ("BE Environmental") (Note 2)

Beijing Enterprises Water Group Limited

Beneficial interests

1,009,600,000

28.04%

("BEWG") (Note 2)

Chang Tat Joel (Note 3)

Interest of controlled corporation

891,000,000

24.75%

Brilliant Champ Investments Limited

Interest of controlled corporation

891,000,000

24.75%

("Brilliant Champ") (Note 3)

Genius Link Utilities GP Limited

Interest of controlled corporation

891,000,000

24.75%

("Genius Link GP") (Note 3)

Genius Link Utilities L.P.

Beneficial interests

891,000,000

24.75%

("Genius Link L.P.") (Note 3)

Central Huijin Investment Ltd.

Interest of controlled corporation

216,000,000

6.00%

("Central Huijin Investment") (Note 4)

China Construction Bank Corporation

Interest of controlled corporation

216,000,000

6.00%

("CCB Corporation") (Note 4)

CCB International Group Holdings Limited

Interest of controlled corporation

216,000,000

6.00%

("CCB International Group") (Note 4)

CCB Financial Holdings Limited

Interest of controlled corporation

216,000,000

6.00%

("CCB Financial Holdings") (Note 4)

CCB International (Holdings) Limited

Interest of controlled corporation

216,000,000

6.00%

("CCB International Holdings") (Note 4)

CCB International Asset Management Limited

Interest of controlled corporation

216,000,000

6.00%

("CCB Asset Management") (Note 4)

HNW Investment Fund Series SPC acting

Beneficial interests

216,000,000

6.00%

for and on behalf of PF Fund Segregated

Portfolio ("HNW Investment") (Note 4)

Zhang Yao (Note 5)

Interest of controlled corporation

204,100,000

5.67%

Glowing Trend Investments Limited

Beneficial interests

204,100,000

5.67%

("Glowing Trend") (Note 5)

Yan Youhui (Note 6)

Interest of controlled corporation

192,200,000

5.34%

Zhao Zhen (Note 6)

Interest of controlled corporation

192,200,000

5.34%

Shanghai Ziyue (Note 6)

Beneficial interests

192,200,000

5.34%

38

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

DISCLOSEABLE INFORMATION (CONTINUED)

Notes:

  1. The approximate percentage was calculated on the basis of 3,600,000,000 shares in issue as of 30 June 2020.
  2. 1,009,600,000 shares are held by BEWG. BEWG is directly held as to approximately 41.13% by BE Environmental and 0.13% by Beijing Holdings Limited. BE Environmental is a wholly-owned subsidiary of BEHL, which is deemed to be held as to approximately 62.14% by BE Group through Beijing Holdings Limited and BE BVI (both are BE Group's direct wholly-owned subsidiaries), Beijing Enterprises Investments Limited ("BEIL") (a company being directly held as to 72.72% by BE BVI), and Modern Orient Limited (BEIL's direct wholly-owned subsidiary).
  3. Genius Link L.P. is managed by Genius Link GP. Genius GP is wholly-owned by Brilliant Champ which is in turn wholly-owned by Chang Tat Joel. By virtue of the SFO, each of the Genius Link GP, Brilliant Champ and Chang Tat Joel is deemed to be interested in all the shares beneficially held by Genius Link L.P..
  4. HNW Investment is wholly-owned by CCB Asset Management which is in turn wholly-owned by CCB International Holdings. CCB International Holdings is wholly-owned by CCB Financial Holdings, which is in turn wholly-owned by CCB International Group. CCB International Group is wholly-owned by CCB Corporation, which is in turn owned as to 57.11% by Central Huijin Investment. By virtue of the SFO, each of Central Huijin Investment, CCB Corporation, CCB International Group, CCB Financial Holdings, CCB International Holdings and CCB Asset Management is deemed to be interested in all the shares beneficially held by HNW Investment.
  5. Glowing Trend is wholly-owned by Zhang Yao.
  6. Shanghai Ziyue is a limited partnership. Yan Youhui and Zhao Zhen are general partners of Shanghai Ziyue.

Save as disclosed above, as at 30 June 2020, the Company had not been notified by any persons (other than the Directors or the chief executive of the Company) who had interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO.

CHANGE IN INFORMATION OF A DIRECTOR UNDER RULE 13.51B(1) OF THE LISTING RULES

Change in information of a Director during the six months ended 30 June 2020 and up to the date of this interim report, which is required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules, is set out below:

Mr. Wu Tak Kong, an independent non-executive Director of the Company, resigned as a non-executive director of Kong Sun Holdings Limited (stock code: 295) on 4 June 2020.

Save as disclosed above, there is no other information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules.

2020 INTERIM REPORT Beijing Enterprises Urban Resources Group Limited

39

CORPORATE GOVERNANCE

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

The Company focuses on maintaining high standards of corporate governance in order to achieve sustainable development and enhance corporate performance. The Board and the management of the Company strive for adhering to the principles of corporate governance and have adopted sound corporate governance practices to meet the legal and commercial standards, focusing on areas such as internal control, risk management, fair disclosure and accountability to all shareholders to ensure the transparency and accountability of all operations of the Company. The Company believes that effective corporate governance is an essential factor to enhance shareholders value and safeguard shareholders' interests. In the opinion of the Board, the Company has complied with all the applicable code provisions of the Corporate Governance Code as set out in Appendix 14 of the Listing Rules from the Listing Date to 30 June 2020.

MODEL CODE FOR DIRECTORS' SECURITIES TRANSACTIONS

The Company has adopted the Model Code as the Company's code of conduct for dealings in securities of the Company by the Directors. Having made specific enquiries to all the Directors, all the Directors have confirmed that they have complied with the required standard set out in the Model Code from the Listing Date to 30 June 2020.

AUDIT COMMITTEE AND REVIEW OF INTERIM RESULTS

The Audit Committee comprises three independent non-executive Directors namely Mr. Wu Tak Kong (the chairman of the Audit Committee), Mr. Orr Ka Yeung, Kevin and Dr. Du Huanzheng. The Audit Committee is primarily responsible for reviewing and providing supervision over the financial reporting procedure and risk management and internal control of the Company. The interim results of the Group for the six months ended 30 June 2020 have been reviewed by the Audit Committee. The Audit Committee considers that appropriate accounting policies have been adopted, and the applicable requirements of the Listing Rules have been complied with, in the preparation of relevant results, and sufficient disclosures have been made.

40

Beijing Enterprises Urban Resources Group Limited 2020 INTERIM REPORT

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Beijing Enterprises Urban Resources Group Ltd. published this content on 23 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 September 2020 22:04:07 UTC

© Publicnow 2021
Copier lien
All news about BEIJING ENTERPRISES URBAN RESOURCES GROUP LIMITED
11/30
09/22
09/09
08/31