TIANJIN CAPITAL ENVIRONMENTAL PROTECTION GROUP COMPANY LIMITED

Tianjin Capital Environmental Protection Group Company Limited

600874

CNE000000HX3

Water Utilities

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Apr. 24	Tianjin Capital Environmental Protection Group Logs Higher Profit, Revenue in Q1	MT
Apr. 23	Tianjin Capital Environmental Protection Group Company Limited Reports Earnings Results for the First Quarter Ended March 31, 2024	CI

Tianjin Capital Environmental Protection : Interim Report 2020

September 15, 2020 at 06:10 pm EDT

Interim Report for the six months ended 30th June 2020

Important

The board of directors (the "Board"), the supervisory committee (the "Supervisory Committee") of Tianjin Capital Environmental Protection Group Company Limited (the "Company") and its directors (the "Directors"), supervisors (the "Supervisors") and senior management guarantee that information in this 2020 interim report (the "Interim Report") does not contain any false information, misleading statements or material omissions, and accept joint and several responsibilities for the truthfulness, accuracy and completeness of its contents.

The Interim Report of the Company for the six months ended 30 June 2020 has not been audited.

Mr. Liu Yujun, the officer in charge of the Company, Ms. Peng Yilin, the officer in charge of accounting operations, and Mr. Liu Tao, the officer in charge of the accounting department (the accounting management officer), have warranted the truthfulness, accuracy and completeness of the financial reports contained in this Interim Report.

IV. The proposal on profit appropriation or transfer of capital reserve fund to share capital for the reporting period as reviewed by the Board

Not applicable

Risk statements for the forward-looking statement No

VI. Did the controlling shareholder of the Company and its connected persons misappropriate the Company's funds for non-operating purposes?

VII. Did the Company provide external guarantees in violation of any specified decision-making procedures? No

VIII. Significant risks warning

IX. Other matters

Unless indicated otherwise, financial figures in this Interim Report are denominated in RMB.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

1. Definitions

In this Interim Report, unless the context requires otherwise, the following terms shall have the following meanings:

"Group"	the Company and its subsidiaries
"Subsidiaries"	Subsidiaries of the Company
"Company"	Tianjin Capital Environmental Protection Group Company Limited
"Tianjin Investment Group"	Tianjin City Infrastructure Construction and Investment Group Company Limited
"TMICL"	Tianjin Municipal Investment Company Limited
"Jiayuanxing"	Tianjin Jiayuanxing Innovative Energy Technology Company Limited
"Jiayuanxin"	Tianjin Jiayuanxin Innovative Energy Technology Company Limited
"Huize Company"	Huize Capital Water Co., Ltd.
"Huoqiu Company"	Huoqiu Capital Water Co., Ltd.
"Changsha Tianchuang Water"	Changsha Tianchuang Capital Water Company Limited
"Qudong Company"	Tianjin Qudong Media Co., Ltd.
"Water Recycling Company"	Tianjin Water Recycling Co., Ltd.
"Hangzhou Company"	Hangzhou Tianchuang Capital Water Co., Ltd.
"Xi'an Company"	Xi'an Capital Water Co., Ltd.
"Caring Company"	Tianjin Caring Technology Development Company Limited
"Bayannur Company"	Inner Mongolia Bayannur Capital Water Co., Ltd.
"Shandong Company"	Shandong Capital Environmental Protection Technology Development Co., Ltd.
"Huaxin Company"	Yunnan Huaxin Construction Engineering Co., Ltd.
"Kangyuan Power Company"	Tianjin Kangyuan Electricity Engineering Company Limited
"Wanli Real Estate Company"	Shandong Wanli Real Estate Co., Ltd.

2 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

2. Company Profile and Major Financial Indicators
INFORMATION OF THE COMPANY

Chinese name of the Company	天津創業環保集團股份有限公司
Abbreviation of the Chinese name of the Company	創業環保
English name of the Company	Tianjin Capital Environmental Protection Group Company Limited
Abbreviation of the English name of the Company	TCEPC
Legal representative of the Company	Liu Yujun

CONTACT PERSON AND METHOD

		Company Secretary	Securities
	Secretary to the Board	in Hong Kong	Affairs Representative

Name	Mr. Niu Bo	Ms. Mona Y.Y. Cho	Ms. Guo Fengxian
Correspondence	TCEP Building, 76 Weijin	22/F, Worldwide House,	TCEP Building, 76 Weijin
address	South Road, Nankai District,	Central, Hong Kong	South Road, Nankai District,
	Tianjin, the People's Republic			Tianjin, the PRC
	of China (the "PRC")
Telephone number	86-22-23930128	852-21629620	86-22-23930128
Facsimile number	86-22-23930126	852-25010028	86-22-23930126
Email address	niu_bo@tjcep.com	cosec@tjcep.com	guo_fx@tjcep.com

III. BASIC INFORMATION

Registered address of the Company	No. 45, Guizhou Road, Heping District, Tianjin, the PRC
Postal code of the registered address of the Company	300051
Office address of the Company	TCEP Building, 76 Weijin South Road, Nankai District, Tianjin,
	the PRC
Postal code of the registered address of the Company	300381
Website of the Company	http://www.tjcep.com
Email address	tjcep@tjcep.com

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

2. Company Profile and Major Financial Indicators

IV. PLACES WHERE THE COMPANY INFORMATION IS DISCLOSED AND AVAILABLE FOR INSPECTION

Name of the newspaper designated by the Company	Shanghai Securities News
for the disclosure of information
Website designated by China Securities Regulatory	www.sse.com.cn
Committee ("CSRC") for the disclosure of Interim Report
Place where the Interim Report of the Company is	Office of the Board, 18/F, TCEP Building, 76 Weijin South
available for inspection	Road, Nankai District, Tianjin, the PRC

PROFILE OF THE SHARES OF THE COMPANY

	Stock Exchange			Stock short name
Shares	for listing shares	Stock short name	Stock code	before its change
A Shares	Shanghai Stock Exchange	創業環保	600874	渤海化工
	(the "SSE")
H Shares	The Stock Exchange of	Tianjin Capital	01065	Tianjin Bohai
	Hong Kong Limited
	(the "Stock Exchange")

4 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

2. Company Profile and Major Financial Indicators

VI. MAJOR ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE COMPANY

Major accounting data

Unit: 0' 000 Currency: RMB

				Increase/decrease
				for the current
				reporting period
		During the		as compared to
		reporting period	During the same	the same period
	Major accounting data	(from January to June)	period last year	last year (%)
	Operating income	152,139.0	122,471.6	24.22
	Net profit attributable to the shareholders of the Company	25,694.8	21,850.3	17.59
	Net profit attributable to the shareholders of the Company after
	deduction of extraordinary items	22,655.0	19,355.3	17.05
	Net cash flow from operating activities	25,509.3	72,970.7	-65.04
				Increase/decrease
				as at the end of
				the current reporting
		As at the end of		period as compared
		the current	As of the end	to the end of
		reporting period	of last year	last year (%)
	Net assets attributable to the shareholders of the Company	627,826.0	617,402.5	1.69
	Total assets	1,832,270.6	1,799,080.7	1.84
(ii)	Major financial indicators

			Currency: RMB
			Increase/decrease for
			the current reporting
	During the reporting		period as compared
	period (from	During the same	to the same period
Major financial indicators	January to June)	period last year	last year (%)
Basic earnings per share (RMB/share)	0.18	0.15	20.00
Diluted earnings per share (RMB/share)	0.18	0.15	20.00
Basic earnings per share after deduction of extraordinary items
(RMB/share)	0.16	0.14	14.29
Weighted average return on net assets ratio (%)	4.13	3.73	Increased by 0.40
			percentage points
Weighted average return on net assets ratio after deduction	3.64	3.31	Increased by 0.33
of extraordinary items (%)			percentage points

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

2. Company Profile and Major Financial Indicators

VII. DIFFERENCES IN ACCOUNTING INFORMATION UNDER THE DOMESTIC AND OVERSEAS ACCOUNTING STANDARDS

Not applicable

VIII. EXTRAORDINARY PROFIT AND LOSS ITEMS AND AMOUNTS

Unit: 0' 000 Currency: RMB

Extraordinary Profit and Loss Items

Government grants recognized in current profit and loss, except for those closely relating to business operation of the Company, in compliance with national policy and settled in certain amount which are constantly granted by government

Other non-operating income and expenses (excluding the above items) Effect on minority interests

Effect on income tax

Total

Amount

3,802.9 -258.5 35.5

-540.1

3,039.8

6 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

3. Company Business Overview

EXPLANATION OF PRINCIPAL BUSINESS OF THE COMPANY, ITS BUSINESS MODEL AND THE INDUSTRY SITUATION DURING THE REPORTING PERIOD
1. Changes in Principal Business of the Company and its Business Model
  During the reporting period, the principal businesses of the Company were water utilities business, new energy cooling and heating supply business and hazardous wastes business. There was no material change in the business scope and business model of the Company's principal business as compared with the beginning of the reporting period.
  For the water utilities business, the Company focuses on strengthening and improving the operation quality of the existing water utilities business, with no significant change in the business scale as compared with the beginning of the reporting period; as of the end of the reporting period, the total capacity of the equity-type water utilities business of the Company amounted to 5.5216 million m3 per day, among which the sewage treatment capacity, water supply capacity (including tap water and industrial water supply capacity) and recycled water capacity under the PPP model was 4.7866 million m3 per day, 315,000 m3 per day, 420,000 m3 per day, respectively, and the sewage treatment capacity under the entrusted operation model was 574,700 m3 per day.
  The service areas of new energy cooling and heating supply business amounted to 2 million m2, with no change in the business scale as compared with the beginning of the reporting period.
  For hazardous wastes business, as of the end of the reporting period, the gross treatment capacity of the Company's comprehensive disposal center project in Lushan Chemical Industrial Park of Yishui reached 40,000 tonnes/year while the treatment capacity of Tancheng Industrial Wastes Treatment Center reached 28,000 tonnes/year. The comprehensive disposal project in Tancheng has an utilization capacity on aluminum sludge and waste hydrochloric acid of 50,000 tonnes/year and an treatment capacity on waste hydrochloric acid of 23,000 tonnes/year; the hazardous waste transit station project of Dongying Economic and Technological Development Zone has capacity to collect, store and transit hazardous waste for 20,000 tons/year; the capacity of the aforesaid businesses remain unchanged as compared to that in the beginning of the reporting period.
  Based on the strategic objectives of integrated environmental service provider, the Company continued to develop new businesses while cementing its basic water utilities business. During the reporting period, the newly-added distributed photovoltaic power generation project had a planned annual electricity generation of 2.9216 million kWh. In August 2020, the Company cooperated with Wanli Real Estate Company, and secured the "comprehensive material ecology disposal center project" located in an agricultural high-tech industry demonstration zone in the Yellow River Delta, which has a total planned storage capacity of 600,000 m3 and the operation model is the same as the hazardous wastes disposal projects in Linyi and Yishui.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

3. Company Business Overview

1. Explanation of Industry Situation
  Driven and guided by the national policies, the demand for the efficiency-oriented systematic governance of water environment has been increased, and the unleashing of market demand for the upgrades and expansion of drainage governance and downtown and village sewage governance has been accelerated; the PPP projects have been further standardized and the whole-cycle performance management of projects has been strengthened; more efforts have been reinforced to environmental monitoring, and the quality and efficiency of water utilities projects are required to be improved. The project operation and servicing capability of water utilities companies will secure an important position in the development of the industry and the market competition in the future.
  The Company will continue to leverage its advantages in project operation capability in the future. On the one hand, the Company will solidify its existing businesses while, on the other hand, proactively pay attention to market opportunities, expand the scale of water utilities business, speed up the layout of strategic new business and enhance the comprehensive environmental governance servicing capability.
EXPLANATION OF THE SIGNIFICANT CHANGES IN THE COMPANY'S MAJOR ASSETS DURING THE REPORTING PERIOD

Not applicable

III. ANALYSIS OF CORE COMPETITIVENESS DURING THE REPORTING PERIOD

During the reporting period, there was no material change in Group's core competitiveness, which is still mainly reflected in the following four aspects: (1) our ability to operate in a safe, stable, up-to-standard and efficient manner; (2) our practical, leading, flexible and sustainable research and development capabilities; (3) our professional, dedicated, cooperative and innovative staff team; (4) our corporate reputation for being trustworthy, responsible, standardized and reliable. These four core competitiveness complement one another in which corporate integrity, diligent employees and technology innovation provide an ultimate assurance to customers, thereby resulting in the Company's positive brand influence in environmental protection.

8 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

4. Operation Discussion and Analysis

OPERATION DISCUSSION AND ANALYSIS
1. Analysis on the overall operation condition during the reporting period
In the first half of 2020, the outbreak of COVID-19 led the whole country into a state of emergency. With a high sense of responsibility and mission, the Company made decisions decisively, deployed scientifically and organized orderly to push forward and implement pandemic prevention and control and economic work at the same time, and withstand downward pressures and develop innovative solutions constantly. The Company achieved good results in the difficult situation according to the operational plans and strategies for 2020 as formulated by the Board by strengthening the operation and the construction strength as the foundation, enhancing the operation management and maximizing efforts in market exploration and innovation on management.
1. Intensify emergency management to ensure the operational safety of projects during the pandemic. Confronted with the challenges brought by the pandemic, the Company conquered difficulties and discharged its social responsibilities by ensuring the normal operation of the sewage, water supply, recycled water, new energy cooling and heating supply projects while proactively implementing the pandemic prevention work deployment of the government. Meanwhile, on the scientific research and development front, the Company organized industry experts to systematically analyze the infection source, the transmission pathogenesis and the features and rules of viruses in sewage and put forward the specific views on prevention measures and operation. On the operation emergency management front, the Company formulated the "Guide on Sewage Treatment Work in the Pandemic Prevention and Control" and the relevant proposals, timely adjusted the processing process and ensured the operational safety of projects. The Company proactively acted in line with project agreements. On 31 July 2020, the Company executed the "Supplemental Agreement to the Licensed Corporation of the Four Sewage Water Treatment Plants in Tianjin Central Area (III)", and determined the new unit price of comprehensive service for sewage treatment to ensure the profitability of its projects.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

4. Operation Discussion and Analysis

Strengthen the basic water utilities business and accelerate to expand the new strategic businesses. During the reporting period, water utilities business of the Company mainly focused on the upgrade and renovation of existing projects, including the upgrade and renovation of recycled water discharged by the two plants in Beishiqiao and Dengjia Village; in respect of the new business development, the Company secured the distributed photovoltaic power generation projects and currently has completed the signing of energy management contracts for users of Jingu Recycled Water Factory and Dalian Chunliu River Sewage Factory. The Tancheng Industrial Wastes Treatment Center Projects obtained the hazardous waste operation permit in April 2020 and entered into the full production and operation stage at the end of July 2020, whereby greatly promoting the ecological environment governance, economic transformation and upgrading and high quality development in Linyi and other urban areas within the province. Leveraging upon its second generation deodorization technology, Caring Company won the bids for the whole-process deodorization projects for Yutian County sewage factory and the Yutian Industry Park Sewage Factory, Xinjiang and the Xinxi Sewage Factory Phase II in Shantou, Guangdong Province; in early August 2020, the Company cooperated with Wanli Real Estate Company and secured the "comprehensive material ecology disposal center project" located in an agricultural high-tech industry demonstration zone in the Yellow River Delta, which further enhanced the market competitiveness of the Company in hazardous wastes businesses area.
Deepen market-oriented reform and consolidate the management innovation achievements. During the reporting period, following the completion of the construction of the professional manager management system, the Company started to carry out the market-oriented appointment and remuneration and assessment work on middle level management from the group level, innovated on diversified motivation methods and further deepened the market-oriented reform of the Company. Meanwhile, under the fresh "super-ministry" organizational framework, the Company further optimized the authorization system and the workflow, improved the construction of the internal control system and consolidated the management innovation achievements.
On 13 July 2020, the Board of the Company has approved the proposed issuance of 323,741,007 new A shares (inclusive) to three specific target investors (i.e. TMICL, Yangtze Ecological Environmental Protection Group Co., Ltd. and Three Gorges Capital Holdings Co., Ltd.) at the issue price of RMB5.56 per share with proposed proceeds of not more than RMB1.8 billion (inclusive) which are fully intended for repayment of interest-bearing liabilities and replenishment of working capital of the Company after deducting the issuance costs (the "Non- public Issuance of A Shares"). The Non-public Issuance of A Shares will be conducted by way of non-public issuance to target subscribers, and the Shares will be issued as and when appropriate within the validity period of the approval in respect of the Non-public Issuance of A Shares to be issued by the CSRC. As of the disclosure date of this Interim Report, the proposal of the Non-public Issuance of A Shares (the "Issuance Proposal") was approved by the State-owned Assets Supervision and Administration Commission of the Tianjin Municipal People's Government on 28 August 2020, and was considered and approved at the 2020 First Extraordinary General Meeting, 2020 First H Shareholders' Class Meeting and 2020 First A Shareholders' Class Meeting which were held on 7 September 2020. The Issuance Proposal is subject to the approval of CSRC. During the reporting period, there was no issuance for cash of equity securities by the Company.

10 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

4. Operation Discussion and Analysis

2. Analysis on the overall results of operations during the reporting period

In the first half of 2020, the Group recorded an operating revenue of RMB1,521.390 million, representing an increase of 24.22% as compared with last year. The operating costs were RMB1,043.229 million, representing an increase of 27.59% as compared with last year. Net profit attributable to the Company was RMB256.948 million, representing an increase of 17.59% as compared to that in the same period last year. The changes in the above results were mainly due to the increased volume of the sewage treatment business and the upward adjustment to the unit price of comprehensive service for sewage treatment of the four sewage treatment plants in Tianjin area.

Analysis of the principal businesses
During the reporting period, the Group's principal business segments did not change significantly compared with the previous year and was still engaged in the sewage treatment and construction of sewage treatment plants business, recycled water business, tap water supply, new energy heating and cooling supply business, toll collection business, transformation of achievements in technology research and hazardous wastes business. It recorded income from principal business of RMB1,417.026 million, accounting for 93.14% of operating income of the Group.
- Sewage treatment business recorded an income of RMB1,093.275 million, representing an increase of 25.48% as compared to the same period last year, which was mainly attributable to the increased volume of sewage water treatment and the upward adjustment to the unit price for the comprehensive sewage treatment service of the four sewage treatment plants in Tianjin area. During the reporting period,

the Group processed a total of 704.85 million m3 of sewage water, representing an increase of 8.2% as compared to the same period last year. On the one hand, the volume of sewage treated by existing projects has increased; on the other hand, certain newly-developed sewage treatment projects were put into operation.

Recycled water business recorded an income of RMB136.733 million, representing a decrease of 0.25% as compared to the same period last year, which was mainly attributable to the decrease in the pipe connection business as compared to the same period last year. However, as the water consumption volume of users increased, the sales volume of recycled water increased as compared to the same period last year. During the reporting period, the sales volume of recycled water was 31.8357 million m3, representing an increase of 11.1% as compared to the same period last year.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

4. Operation Discussion and Analysis

Tap water supply business recorded an income of RMB46.924 million, representing a decrease of 5.59% as compared to the same period last year, which was mainly attributable to the decreased water consumption volume by users due to the impact of the pandemic. The water sales volume was 25.687 million m3, representing a decrease of 3.9% as compared to the same period last year.

New energy heating and cooling supply business recorded an income of RMB46.057 million, representing an increase of 13.95% as compared to the same period last year, which was mainly attributable to the newly-increased area of the heating and cooling supply of the Heiniucheng Road project.

Transformation of achievements in technology research into business recorded an income of RMB13.571 million, representing a decrease of 26.62% as compared to the same period last year, which was mainly attributable to the decreased work quantity of the deodorization business.

Toll collection business recorded an income of RMB31.302 million, which remained more or less the same as the same period last year.

The hazardous wastes business started generating income from the second half of 2019 and recorded an total income of RMB33.029 million during the reporting period.

During the reporting period, while striving for market expansion for its principal business, the Company continued to strengthen its project operation (including cost control and agreement maintenance), decrease the operating cost as much as possible, and timely adjust the unit price of sewage treatment service fees for ensuring project income.

3. Other business

The Group's other business mainly includes the sewage treatment entrusted operation business under the technical service model, as well as the technical and engineering consulting business. During the reporting period, it realized an income of RMB104.364 million, representing an increase of 36.83% as compared to that in the same period last year. The increase was mainly due to the new technical service projects.

12 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

4. Operation Discussion and Analysis

Analysis of principal businesses

Table of analysis of changes in relevant items in the financial statements

Unit: 0' 000 Currency: RMB

	Amount for the	Amount for the
Item	current period	same period last year	Percentage change (%)
Income from operations	152,139.0	122,471.6	24.22
Costs of operations	104,322.9	81,763.0	27.59
Distribution costs	792.2	198.7	298.69
Administrative expenses	7,025.3	6,803.2	3.26
Financial costs - net	11,298.7	9,312.3	21.33
Impairment losses on financial assets	0.0	98.0	-100.00
Other (losses)/gain - net	-2,585.0	1,370.0	-288.69
Income tax expense	59,172.0	56,154.0	5.37
Net cash flows from operating activities	25,509.3	72,970.7	-65.04
Net cash flows from investing activities	-75,781.5	-127,960.6	-40.78
Net cash flows from financing activities	22,824.5	76,564.9	-70.19

Explanation of changes in income from operations: It was mainly due to the increase in sewage treatment volume of existing projects and certain new sewage treatment projects, as well as the implementation of the new treatment price of the sewage treatment plants in Tianjin area, thus the income from sewage treatment increased.

Explanation of changes in operating costs: It was mainly due to the higher effluent quality standards of sewage treatment projects, the increased treatment volume and the increased operating expenses including chemical cost resulting in increased costs of the sewage treatment business accordingly.

Explanation of changes in distribution costs: It was mainly due to the increased distribution expenses incurred as a result of the commencement of operation of the hazardous waste project of the Company.

Explanation of changes in administrative expenses: It was mainly due to higher staff expenses than that in the same period last year after the official commencement of operation of new projects.

Explanation of changes in financial costs: It was mainly due to the conversion of the corresponding financial expenses from capitals to expenses after commencement of operation of new projects.

Explanation of changes in impairment losses on financial assets: It was mainly because the collected accounts receivable for which provision for impairment losses were made in the same period last year was higher than that in the current period.

Explanation of changes in the (losses)/gains - net: It was mainly because the one-time government subsidy received in the current period was lower than that in the same period last year.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

4. Operation Discussion and Analysis

Explanation of changes in income tax expense: It was mainly due to the increase in profit.

Explanation of changes in net cash flows from operating activities: It was mainly due to the decrease of sewage treatment service fee and other operation-related fees charged in this period as compared to the same period last year and the higher operating expenses, various taxes and other operation-related collection as compared to the same period last year.

Explanation of changes in net cash flows from investing activities: It was mainly due to the decrease in investment expenses of various construction projects of the Company as compared to the same period last year.

Explanation of changes in net cash flows from financing activities: It was mainly because the debt financing repaid for the current year was higher than that in the same period last year.

(II) Major changes in profits caused by non-principal businesses

Not applicable

(III) Analysis of assets and liabilities

Unit: 0' 000 Currency: RMB

					Percentage
					change in
					amount as of
		Percentage of the		Percentage of	the end of the
		amount as of		the amount	current period
		the end of the	Amount as of	as of the end of	as compared to
	Amount as of	current period to	the end of the	the same period	the end of same
	the end of the	the total assets	same period	last year to the	period last year
Items	current period	(%)	last year	total assets (%)	(%)	Explanation
Notes receivable	908.7	0.05	1,613.1	0.09	-43.67	Mainly due to the receipt of the matured bank
(Note 1)						drafts in the current period
Other receivables	3,389.9	0.19	6,515.6	0.36	-47.97	Mainly due to the collection of deposit on bids
						and the increase in the refund-upon-collection tax
						receivable during this period
Other current	11,705.1	0.64	8,972.8	0.50	30.45	Mainly due to increase in value-added tax to be
assets						credited
Wages payables	2,379.7	0.13	6,610.0	0.37	-64.00	Mainly due to the payment of year-end bonus
						provided for 2019 during the period
Borrowings - short	52,511.3	2.87	105,986.9	5.89	-50.45	Mainly due to the repayment of borrowings due
term						within one year
Borrowings - long	595,911.5	32.52	506,679.7	28.16	17.61	Mainly due to the newly-addedlong-term
term						borrowings of the Company

Note 1: Notes receivable is included in trade receivables.

14 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

4. Operation Discussion and Analysis

(IV) Analysis of investment

During the reporting period, the total amount of equity investment of the Company amounted to RMB216.1579 million, representing a decrease of RMB261.5854 million as compared to the same period last year, which was mainly because there were fewer new projects secured by the Company in the first half of the year compared to that in the same period last year.

Major equity investments
- The joint venture established by the Company and Huaxin Company won the bid for the governmental and social cooperation PPP project of the construction of the urban sewage treatment facilities for towns in Huize County. The total amount of investment in the project was RMB141.2312 million, including the value of assets of existing projects and the investment amount of newly-constructed incremental projects. After winning the bid, both parties to the joint venture and the investing representative of the government jointly invested to establish Huize Company for the purpose of investment and financing, construction and operation and maintenance work, with a registered capital of RMB41.2368 million, of which RMB32.6595 million was contributed by the Company, representing 79.20% of the total investment, RMB329,900 was contributed by Huaxin Company, representing 0.80% of the total investment, and RMB8.2474 million was contributed by the government on behalf of the Huize sewage treatment plant, representing 20% of the total investment. During the reporting period, Huize Company was established and the capital injection was completed.

The Company won the bid for phase I of the PPP project of the second sewage treatment plant in the north of Huoqiu County with a total investment amount of RMB206.4152 million. After winning the bid, the Company and the investing representative of the government registered and established Huoqiu Company for the purpose of investment and financing, construction and operation and maintenance for the PPP project. The principal amount of the registered capital of Huoqiu Company was RMB41.2830 million, of which RMB37.1547 million was contributed by the Company in cash, representing 90% of the total investment, and RMB4.1283 million was contributed by the government on behalf of Huoqiu County Urban Construction Investment Co., Ltd.* (霍邱縣城鎮建設投資有限公司) in cash, representing 10% of the total investment. During the reporting period, Huoqiu Company was established and the capital injection was completed.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

4. Operation Discussion and Analysis

The PPP project of the Sewage Treatment Plant and Recycled Water Reuse Engineering of Changsha Tianchuang Water, a subsidiary of the Company, within Ningxiang Economy and Technology Development Zone underwent a transformation of and adjustment to its inflow pipeline networks, tail water lifting pump stations and other works during the process of construction, with additional investments of RMB10.5232 million. In accordance with the requirements of the "Licensed Operation Agreement", the principal amount of the project shall be 20% of the additional investment, or RMB2.1046 million, which was contributed proportionally by four shareholders of Changsha Tianchuang Water, of which RMB1.6837 million was contributed by the Company, representing 80% of the total investment, RMB63,100 was contributed by Tianjin Motianmo Technology Co., Ltd.* (天津膜天膜科技股份有限公司), representing 3% of the total investment, RMB147,300 was contributed by Tianjin Second Municipal Road Engineering Co., Ltd.* (天津第二市政公路工程有限公司), representing 7% of the total investment; and RMB210,500 was contributed by Changsha Shuntai Investment Management Co., Ltd.* (長沙順泰投資管理有限公司), representing 10% of the total investment. Upon completion of the capital increase, the registered capital of Changsha Tianchuang Water increased from RMB19.1476 million to RMB21.2522 million, and it remains to be the controlling subsidiary of the Company. During the reporting period, the capital increase of Changsha Tianchuang Water was not yet completed.

Jiayuanxin, a subsidiary of Jiayuanxing, a wholly-owned subsidiary of the Company, implemented the distributed photovoltaic power generation project with a total investment amount of RMB13.2856 million, of which the capital of RMB4.15 million was contributed proportionally by both shareholders of Jiayuanxin according to their respective shareholding with Jiayuanxing contributing RMB2.49 million, representing 60% of the capital invested and Kangyuan Power Company* (康源電力公司) contributing RMB1.66 million, representing 40% of the capital invested. Upon the capital increase, the registered capital of Jiayuanxin was increased from RMB5 million to RMB9.15 million and it remains to be the controlling subsidiary of Jiayuanxing. During the reporting period, such capital increase was not yet completed.

- Xi'an Company, a wholly-owned subsidiary of the Company, implemented the upgrade and renovation of recycled water discharged by the two plants in Beishiqiao and Dengjia Village with a total amount of investment of RMB473.90 million. The principal amount of the investment in the project is RMB142.17 million, accounted for 30% of the total investment, which was injected by the Company to Xi'an Company. Upon completion of the capital increase, the registered capital of Xi'an Company was increased from RMB334 million to RMB476.17 million. During the reporting period, such capital increase was not yet completed.
Significant non-equity investment
Not applicable

16 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

4. Operation Discussion and Analysis

(V) Disposal of major assets and equity interest

Not applicable

(VI) Analysis of major companies in which the Company has invested

Unit:0' 000 Currency: RMB

	Principal		Registered	Type of	Percentage
Subsidiaries	Place of Business	Major Products or Services	Capital	Legal Person	of interest	Asset Size	Net Assets	Net Profits
Water Recycling	Tianjin	Production and sales of recycled	10,000	Limited	100%	123,163.5	33,912.3	3,963.5
Company		water; development and		company
		construction of water recycling
		facilities; manufacturing,
		installation, debugging and
		operation of water recycling
		facilities etc.
Hangzhou	Hangzhou,	Operation and maintenance of	37,744.50	Limited	70%	92,548.8	71,359.9	4,037.6
Company	Zhejiang	sewage treatment and recycled		company
		water usage facilities and other
		technical services, and supporting
		services such as its technical
		training.
Xi'an Company	Xi'an, Shaanxi	Development, construction,	33,400	Limited	100%	60,502.7	46,199.1	2,108.8
		operation and management of		company
		municipal sewage treatment plants
		and tap water and its supporting
		facilities; R&D and promotion
		of environment protection
		technology
Jiayuanxing	Tianjin	Development, consulting, service	19,195.052	Limited	100%	68,371.4	34,161.7	885.8
		and transfer of energy conservation		company
		and new energy technology;
		property management services;
		heating supply service; cooling
		supply service.
Caring Company	Tianjin	Environmental engineering	3,333.3333	Stock	60%	14,623.2	11,935.9	723.6
		management and technical advice,		Limited
		etc.		Company
Bayannur	Bayannur, Inner	Processing of sewage water,	106,757.79	Limited	70%	115,552.7	112,639.8	173.9
Company	Mongolia	production and sales of recycled		company
		water and supply of tap water
Shandong	Shandong	Disposal of solid wastes, industrial	19,200	Limited	55%	55,269.7	19,138.2	751.2
Company		wastes, hazardous wastes, sludge,		company
		kitchen wastes, etc.

Note 1: Water Recycling Company recorded revenue from principal operations of RMB131.347 million and operating profit of RMB40.861 million.

Note 2: Hangzhou Company recorded revenue from principal operations of RMB119.374 million and operating profit of RMB43.016 million.

Note 3: Xi'an Company recorded revenue from principal operations of RMB79.521 million and operating profit of RMB39.711 million.

Note 4: Shandong Company recorded revenue from principal operations of RMB33.029 million and operating profit of RMB17.984 million.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

4. Operation Discussion and Analysis

II. OTHER DISCLOSURE

Warning and explanation for possible cumulative net loss expected to be recorded for the period from the beginning of the year to the end of the next reporting period or material changes of cumulative net profit as compared to the corresponding period of the previous year

Not applicable

Possible risks
1. Risk from the novel coronavirus pneumonia (COVID-19) epidemic
  The COVID-19 epidemic may cause certain impact and influence to the economy in the short term. For existing businesses, enterprises also need to be well prepared for the epidemic prevention and control in addition to ensuring safety and quality, which will increase working difficulties and costs and expenses to some extent. The business expansion will also be affected by the epidemic prevention and control in the whole society, which may bring uncertainties to the market. However, with the resumption of production in various regions nationwide and the recovery of the economy in the second quarter, it can be expected that the relevant risks brought by the epidemic will be alleviated.
2. Risk of government credit
  Given the characteristic of licensed operation in sewage treatment projects, the capital source of sewage treatment service fee comes mainly from the special sewage-treatment fee charged by the governments through the sales of tap water; the deficient amount will be supplemented by the local governments. Most of the PPP package projects currently promoted included the investment and construction of infrastructures such as pipeline networks with huge investments from social capital sources, the investment return relies mainly on the payment of sewage treatment service fee from the governments. Therefore, the exclusiveness of capital source determines the importance and cruciality of the government credibility. Whether water utilities companies can recoup the investment as scheduled and obtain the expected rate of return depends on the level of government credibility. In case the risk related to government credibility occurs, the project companies will face cash flow problem, which may generate capital risks such as financial risks and financing risks.

18 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

4. Operation Discussion and Analysis

Risk of change in policy
Currently, the PRC is at the special stage of comprehensive deepening of reform. For a long period in the future, there will be transformative changes in policies related to economy, finance, prices, financial taxation and government functions, etc. The policy changes in prices and taxes will directly influence the adjustment of water price. During the licensed operation period lasting for 30 years, as a social investor, one needs to focus on the risk of change in policy.
Risk of operation and management
With the introduction of a series of energy-saving and emission reduction requirements under the national "13th Five-Year Plan", the standards for environmental governance will become more stringent. In order to meet the new standards, the demands for upgrading sewage treatment plants will gradually increase. During the forthcoming "14th Five-Year Plan" period, the environmental protection standards may be further enhanced. Under this circumstance, on one hand, sewage treatment plants will face restructuring and operational risk. On the other hand, enterprises will also face the risk of adjusting the original licensed operation agreement.

2. Risk control measures

Continue to focus on both the "epidemic prevention and control" and the "economic work" and fully address the risks brought by epidemic
Confronted with the COVID-19 epidemic, enterprises must be well prepared for the epidemic prevention and control, effectively protect the physical health of the staff, accomplish all the work and try all means to ensure the orderly carrying out of the business operation plans as scheduled while performing their social responsibilities.
Protect the Company's lawful interests by making full use of laws and regulations
Strengthening the concept of corporate governance in accordance with the laws by making full use of its overall legal advisory system and protecting lawful interests of the Company. Meanwhile, the Company calls for and supports the further assurance of equality of the contracting parties under the licensed operation and PPP projects, tighten up the performance assessment and profit distribution mechanisms, and provide for the government obligations to pay according to contracts and the rights for investors to get reasonable returns under the laws, so as to reduce the risk related to government credibility and the financial risk of the investors.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

4. Operation Discussion and Analysis

1. Strengthen comprehensive risk management
  Determine the target for comprehensive risk management; establish the institutional framework for comprehensive risk management to identify, analyse, assess and deal with possible hidden risks in different business links; improve the risk management system and establish a sound and comprehensive risk management system for the Company; improve its timing and efficiency of the comprehensive risk management of the Company; conduct the dynamic management and effective control over risks so as to reasonably ensure the achievement of the Company's strategic targets.
2. Continue to raise the standards of operating management
  As a listed company in the environmental protection field, the Company has control over production and operation risks in a timely manner through standardized management in accordance with relevant changes in policies. Specifically, our risk control measures include staff training, strengthening the consciousness of laws on environmental protection and improving the management and control levels of technologies; strengthening the maintenance and protection of facilities for proper preservation of asset value and stable operation; perfecting the monitoring of quality, promoting control over the whole process to ensure the end products could meet the standards of discharge; developing water environment remedy plans and safe production plans, so as to ensure careful operation and the best environmental performance of the Company under force majeure conditions.
Other disclosure
The Company convened the 32nd meeting of the eighth session of the Board on 13 July 2020 to consider and approve the relevant resolutions regarding the Non-public Issuance of A Shares. The Issuance Proposal was approved by State- owned Assets Supervision and Administration Commission of the Tianjin Municipal People's Government on 28 August 2020, and was considered and approved at the 2020 First Extraordinary General Meeting, 2020 First H Shareholders' Class Meeting and 2020 First A Shareholders' Class Meeting held on 7 September 2020. The Issuance Proposal is subject to the approval of CSRC. Details about the Non-public Issuance of A Shares were disclosed in the announcement published by the Company on the website of Shanghai Stock Exchange at http://www.sse.com.cn and the Hong Kong Stock Exchange at http://www.hkex.com.hk on 14 July 2020, and the circular published by the Company on the website of the Hong Kong Stock Exchange at http://www.hkex.com.hk on 21 August 2020.

20 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

5. Major Events

SHAREHOLDERS' GENERAL MEETINGS

Session of meeting	Date of meeting	Date of disclosure of the resolutions
2019 Annual General Meeting	13 May 2020	13 May 2020

PROPOSAL ON PROFIT DISTRIBUTION OR TRANSFER OF CAPITAL RESERVE FUND

Proposed interim profit distribution plan or plan to transfer capital reserve fund into share capital

Profit distribution or transfer of capital reserve fund into share capital	No
Number of bonus shares per 10 shares (shares)	0
Amount of dividend per 10 shares (RMB) (inclusive of tax)	0
Number of shares converted per 10 shares (shares)	0

III. PERFORMANCE OF COMMITMENT

Commitment of the Company's ultimate controller, shareholders, related parties, purchasers and the Company during or subsisted in the reporting period

Not applicable

IV. APPOINTMENT AND REMOVAL OF ACCOUNTING FIRM

Not applicable

MATTERS RELATING TO BANKRUPTCY AND RESTRUCTURING

Not applicable

VI. MATTERS RELATING TO MATERIAL LITIGATION AND ARBITRATION

Litigation and arbitration that were disclosed in the announcements without subsequent progress
Not applicable

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

5. Major Events

Litigation and arbitration that were not disclosed in the temporary announcements or have subsequent progress

							Unit: Yuan	Currency: RMB
During the reporting period:
						Whether litigation
						(or arbitration)		Ruling results
				Particulars of	Amount involved	forms predicated	Progress of	of litigation		Enforcement of
		Party to bear	Type of litigation	litigation	in litigation	liability and	litigation	(or arbitration)	award of litigation
Complaining party	Responding party	joint liability	or arbitration	(or arbitration)	(or arbitration)	its amount	(or arbitration)	and its effect		(or arbitration)
Jiayuanxing	Qudong Company	None	Litigation	Note 1	12,030,003	None	Execution	Note 2		Termination of
										execution (note 2)

Note 1: From 2012 to 2016, Jiayuanxing and Qudong Company signed the "Tianjin Non-residential Buildings Cold Supply Contract 《( 天津市非居民住宅供用冷合同》)" and "Tianjin Non-residential Buildings Heat Supply Contract 《( 天津市非居民住宅供用熱合同》)", in which it is stipulated that Jiayuanxing would provide cold and heat supply services to the Tianjin Cultural Center Grand Theatre (天津文化中心大劇院), which was operated and managed by Qudong Company. Qudong Company did not pay cold and heat supply energy fees to Jiayuanxing on time and in full according to the contract. In order to safeguard the legal rights and interests of Jiayuanxing, on 3 November 2017, Jiayuanxing filed a civil lawsuit in the People's Court of Hexi District, Tianjin ("Hexi Court"). On 3 April 2018, the Hexi Court made a first-instance judgment, ruling that Qudong Company paid Jiayuanxing cold and heat supply energy fees of RMB12,030,003 from 2012 to 2016 within ten days from the effective date of the first-instance judgment; case acceptance fees and preservation fees totaling RMB98,980 were borne by Qudong Company. Both parties refused to accept the first-instance judgment and appealed to the Tianjin Second Intermediate People's Court. On 25 September 2018, the Tianjin Second Intermediate People's Court made the final judgment, ruling to reject the appeal applications of both parties and maintain the original judgment.

Note 2: On 22 October 2018, Jiayuanxing applied to the Hexi Court for enforcement. On 19 December 2018, under the direction of the Hexi Court, both parties reached a settlement agreement in implementation. Qudong Company shall pay in advance RMB3.16 million and the remaining amounts shall be repaid by four installments by 31 December 2020. If Qudong Company fails to perform in one installment, the implementation based on the original legal documents will be resumed. On 11 January 2019, RMB3.1635 million repaid by Qudong Company in advance had been in the account. On 21 January 2019, Jiayuanxing received an execution ruling from the Hexi Court. Upon execution, both parties reached a settlement agreement. As the agreement has not been completed for fulfillment, the court made a ruling to end the implementation of the civil judgment of the Hexi Court (2017) Jin 0103 Minchu No. 12411. Prior to 31 December 2019, Qudong Company had paid off the first and second payment, in total of RMB7.4013 million, in accordance with the content of the settlement agreement. Qudong Company had intended to complete the third payment before 30 June 2020. However, due to the pandemic, Qudong Company had no performance activities and no operating income in the first half of 2020. Qudong Company applied to Jiayuanxing for postponing the payment of the balance. The two parties are currently negotiating on this matter.

22 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

5. Major Events

VII. PUNISHMENTS TO AND RECTIFICATION OF THE LISTED COMPANY AND ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING SHAREHOLDERS, ULTIMATE CONTROLLER AND PURCHASERS

Not applicable

VIII. EXPLANATION ON THE INTEGRITY OF THE COMPANY, ITS CONTROLLING SHAREHOLDERS AND ULTIMATE CONTROLLERS DURING THE REPORTING PERIOD

Not applicable

IX. THE COMPANY'S SHARE INCENTIVE SCHEME, EMPLOYEE STOCK OWNERSHIP PLAN, OR OTHER EMPLOYEE INCENTIVE SCHEME AND THEIR EFFECTS

Not applicable

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

5. Major Events

MATERIAL CONNECTED TRANSACTIONS
1. Connected Transactions in the Ordinary Course of Business
  Not applicable
2. 1. Connected Transactions which have been disclosed in the Company's announcements, but without subsequent progress or changes to their implementation
    Not applicable
  2. Connected Transactions which have been disclosed in the Company's announcements, with subsequent progress or changes to their implementation

Not applicable

Connected Transactions in respect of Acquisition of Assets or Acquisition or Disposal of Equity

Not applicable

(III) Material Connected Transactions in respect of Joint External Investment

Not applicable

(IV) Creditor's Rights and Debts with Connected Parties

Not applicable

24 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

5. Major Events

XI. MATERIAL CONTRACTS AND THEIR IMPLEMENTATION

Custody, Contracting and Leasing
Not applicable
Guarantees

Unit: 0' 000 Currency: RMB

Guarantees provided to external parties by the Company (excluding guarantees provided to subsidiaries)	0
Total amount of guarantees provided during the reporting period (excluding guarantees provided to subsidiaries)
Total balance of guarantees as at the end of the reporting period (A) (excluding guarantees provided to subsidiaries)	0
Guarantees provided to subsidiaries by the Company	9,019.56
Total amount of guarantees provided to subsidiaries during the reporting period
Total balance of guarantees provided to subsidiaries as at the end of the reporting period (B)	393,835.89
Total amount of guarantees provided by the Company (including guarantees provided to subsidiaries)	393,835.89
Total amount of guarantees (A+B)
Percentage of the total amount of guarantees to the net assets of the Company (%)	62.73
Including:	0
Amount of guarantees provided to shareholders, ultimate controller and their connected parties (C)
Amount of debt guarantees provided directly or indirectly to guaranteed entities with a gearing ratio of over 70% (D)	64,462.12
The amount of total guarantees in excess of 50% of net assets (E)	79,922.89
Total of the above three classes of guarantees (C+D+E)	144,385.01

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

5. Major Events

XII. POVERTY ALLEVIATION WORK OF THE COMPANY

Targeted Poverty Alleviation Plan
1. In accordance with the overall arrangement of Tianjin's targeted poverty alleviation work, the total investment capital demand for the assistance projects for Nancaicun Town government and the projects of the maintenance of the main road and the dredging and renovation of ditches and ponds in Xixiaoliang Village of Nancaicun Town is RMB4.1671 million, which has been paid as scheduled by the Company at the end of reporting period. The assistance funds are subject to special account management and the "fixed sum for fixed purpose" policy, and are to be used in accordance with the principle of "special account accounting and special usage only". Special income and expenditure account will be established individually, and the funds for each village will be accounted separately. The resident assistance team sent out by Tianjin Investment Group will be responsible for supervising and verifying the usage of assistance funds.
2. In accordance with "Implementation Plan for 2020 on Promoting Quality Collaboration in Poverty Alleviation and Support Between the Eastern and Western Regions for Accomplishing Poverty Elimination Tasks On Schedule of Tianjin", the Company donated RMB500,000 to public benefit organizations to support the construction of the assistance regions in Xiqing District of Tianjin and won the appreciation of Red Cross Society of Xiqing District and Special Group for Social Mobilization.
3. In response to the poverty alleviation requirements of the Xianning Government, Wuhan Xianning Branch will target poverty alleviation in Lushui Village, Gaotieling Town, Jiayu County, Xianning City in June 2020. It plans to donate RMB100,000 for road paving, ground leveling, and compensation for young crops so as to support the tourism industry in Lushui Village.
4. To help fishermen get rid of poverty as soon as possible, more than 1,000 households of more than 2,800 Dahu fishermen in Honghu City moved ashore in different places. The fishermen encounter many difficulties in perspectives such as life, medical care, employment, and children's education. Honghu Government advocates donations and assistance from all sectors of the society. Honghu Company responded actively and planned to donate RMB100,000 to the Honghu Charity Federation for the purpose of subsequent assistance to fishermen.
Summary of Targeted Poverty Alleviation During the Reporting Period
Not applicable
Achievements in Targeted Poverty Alleviation
Not applicable

26 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

5. Major Events

Milestones in the progress of fulfilling the social responsibility of targeted poverty alleviation
Please refer to the above targeted poverty alleviation plan.
Subsequent Targeted Poverty Alleviation Plan

Please refer to the above targeted poverty alleviation plan.

XIII. CONVERTIBLE BONDS

Not applicable

XIV. EXPLANATION ON ENVIRONMENTAL PROTECTION OF THE COMPANY AND ITS IMPORTANT SUBSIDIARIES CLASSIFIED AS KEY POLLUTANT DISCHARGING ENTITIES AS PUBLISHED BY ENVIRONMENTAL PROTECTION AUTHORITIES

The Company is mainly engaged in the sewage treatment business, which involves collecting and treating domestic and municipal sewage by removing the main pollutants therein to the extent that the treated sewage meets the discharge standards stipulated by the national or local government, and then discharging the treated sewage to rivers via sewage outfalls as designated after assessment. The advanced treatment of part of the tail water is further performed for reclaimed water supply. According to the aforesaid effluent water quality standards for sewage treatment plants stipulated by the national or local government, the effluent of sewage treatment plants is allowed to contain certain types and amounts of pollutants, mainly comprising chemical oxygen demand (COD), biochemical oxygen demand (BOD), suspended solids (SS), total nitrogen, ammonia nitrogen and total phosphorus, etc. Accordingly, given the fact that most of sewage treatment projects have a designed capacity of exceeding 20,000 tonnes/day, they are classified as key pollutant discharging entities by local environmental protection authorities.

As at the end of the reporting period, the Company owned 41 sewage treatment projects, each of which has 1 or 2 discharge outfalls determined after examination and demonstration by competent authorities and experts in the industry. As per this agreement, currently the effluent water quality required is class A specified in the Pollutant Discharge Standards for Urban Wastewater Treatment Plants (DB12/599-2015) of Tianjin and First Grade A, First Grade B under the Pollutant Discharge Standards for Urban Wastewater Treatment Plants (GB18918-2002). The common pollutant indexes requiring basic control include COD, BOD, SS, total nitrogen, ammonia nitrogen, total phosphorus, etc. The following table sets out the maximum allowable discharge concentrations (daily average) of the pollutant indexes requiring basic control.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

5. Major Events

			National standard	National standard	Tianjin local
No.	Pollutant index requiring basic control	- first grade class A	- first grade class B	standard - class A

1	COD	50	60	30
2	BOD	10	20	6
3	SS	10	20	5
4	Animal & plant oil	1	3	1
5	Petroleum	1	3	0.5
6	Anion surfactant	0.5	1	0.3
7	Total nitrogen (N)	15	20	10
8	Ammonia nitrogen (N)	5(8)	8(15)	1.5(3)
9	Total phosphorus (P)	Constructed before 31 December 2005	1	1.5	0.3
Constructed after 1 January 2006	0.5	1	0.3

10	Chroma (dilution multiple)	30	30	15
11	PH		6-9
12	Number of fecal coliforms/L	1000	10000	1000

During the reporting period, the discharge concentrations of the major pollutant indexes requiring basic control of the Company's sewage treatment business were all below the above standards. In aggregate, the COD, BOD, SS, total nitrogen, ammonia nitrogen and total phosphorus discharged by the Company during the reporting period were approximately 12,900 tonnes, 3,000 tonnes, 2,700 tonnes, 5,900 tonnes, 500 tonnes and 100 tonnes, respectively. In aggregate, environmental pollutants, namely, the COD, BOD, SS, total nitrogen, ammonia nitrogen and total phosphorus, were eliminated by approximately 211,800 tonnes, 93,700 tonnes, 140,600 tonnes, 24,900 tonnes, 22,500 tonnes and 3,200 tonnes, respectively, representing a significant contribution to water environmental governance.

Construction and Operation of Pollution Prevention Facilities
During the reporting period, the sewage treatment projects operated by the subsidiaries of the Company strictly complied with the relevant emission standards with all the effluent water quality and odor, noise and solid emission meeting the requirements. The projects' operation was also in normal condition. The construction of the sewage treatment facilities followed the relevant construction procedures and quality standards and proceeded normally.
Environmental Impact Assessment of Construction Projects and Other Administrative Permissions for Environmental Protection
The environmental assessment of the Company's construction projects was carried out normally in accordance with the construction schedule, and there was no major obstacle.

28 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

5. Major Events

Emergency Plans for Sudden Environmental Incidents
During the reporting period, all key pollutant discharge entities of the Company's sewage treatment business prepared the "Environmental Emergency Response Plan for Sewage Treatment Plants" with reference to the "Interim Measures for the Administration of Environmental Emergency Response Plan", and the plan was approved by and filed with the local environmental protection bureau.
Environmental Self-monitoring Program
During the reporting period, all key pollutant discharge entities of the Company's sewage treatment business carried out environmental self-monitoring in accordance with the relevant requirements of the government. At the beginning of each year, each entity prepares the "Environmental Self-monitoring Program" for the year based on the actual situation. The monitoring program mainly specifies the monitoring items, monitoring points, monitoring methods, monitoring frequency and analysis methods, etc. The monitoring results are publicized on the local environmental information monitoring platform. Each entity will also file the self-monitoring program and adjustments and changes with the local environmental protection bureau in a timely manner.
Other Environmental Information that Should be Disclosed

Not applicable

Description of Environmental Information of Companies other than those Classified as Key Pollutant Discharge Entities
Not applicable
Explanation of Reasons for Non-disclosure of Environmental Information of Companies other than those Classified as Key Pollutant Discharge Entities
Not applicable
Description of Follow-up Progress or Changes in the Disclosure of Environmental Information during the reporting period
In 2018, the Xiqing District Environmental Protection Bureau, Dongli District Environmental Protection Bureau and Beichen District Environmental Protection Bureau imposed penalty as Xiangyang Road sewage treatment plant, Dongjiao sewage treatment plant and Beicang sewage treatment plant did not meet the class A standard (see annual report 2019 of the Company). During the reporting period, the aforesaid matters are still under the process of active coordination.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

5. Major Events

XV. DETAILS OF OTHER MAJOR EVENTS

As compared with the previous accounting period, the changes made to accounting policies, accounting estimates and auditing method, the reasons for such changes and their effect

Not applicable

The occurrence of material accounting errors during the reporting period requiring ratification and restatement, the respective amounts, the reasons and their effect

Not applicable

Other events
The following events are disclosed and explained in accordance with the relevant rules of the Stock Exchange:
1. Corporate Governance Code
  None of the Directors is aware of any information that would reasonably indicate that the Company is not or was not, for any part of the reporting period, in compliance with the Corporate Governance Code as set out in Appendix 14 of the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules").
2. Audit committee
  On 31 July 2001, the Board approved the establishment of the Audit Committee to review and supervise the Company's financial reporting procedure and internal controls. The Audit Committee of the current session comprises the independent non-executive Directors, Mr. Guo Yongqing, Mr. Di Xiaofeng and Mr. Wang Xiangfei. The Audit Committee, together with the management of the Company, have reviewed the accounting principles and practices adopted by the Group and discussed with the management of the Company the internal controls and financial reporting matters including the review of the unaudited interim results and the Interim Report. The Audit Committee agreed with the accounting principles, standards and methods adopted in the preparation of the Group's unaudited interim accounts for the six months ended 30 June 2020.
3. Liquidity and financial resources
  No seasonal changes have occurred to the borrowing needs of the Group. As of 30 June 2020, there were no outstanding bank borrowings or interests that were due. Details about the bank borrowings of the Group are set out in the Notes to the Condensed Consolidated Financial Statements as of 30 June 2020.
  According to the accounting reports prepared in accordance with the PRC's Accounting Standards for Business Enterprises, the liquidity ratio as of 30 June 2020 was 60.30%.

30 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

5. Major Events

Foreign Exchange Risk
The operations and customers of the Group's Subsidiaries are located in the PRC. Most of the operating assets and transactions are settled in RMB, and all of the Group's borrowings are denominated in RMB. Therefore, the Group is not exposed to significant foreign exchange risk. The sole foreign exchange exposure of the Group arises from long-term payables. Such long-term payables were resulted from the Asset Transfer Agreement signed between the Company and TSC for the purchase of assets generated from foreign bank loans, involving mainly US dollars (USD) and Japanese Yen (Yen).
As at 30 June 2020, a 5% appreciation or depreciation of RMB against USD, with other factors being constant, would result in an increase or decrease of RMB3 million (30 June 2019: RMB3 million) in the net profit of the Group. As at 30 June 2020, a 5% appreciation or depreciation of RMB against Yen, with other factors being constant, would result in an increase or decrease of RMB9 million (30 June 2019: RMB8 million) in the net profit of the Group.
The interest rate risk of the Group mainly came from interest-bearing debts such as borrowings, long-term payables and debentures. The Group has borrowings, long-term payables and debentures. Borrowings and long- term payables at floating rates expose the Group to interest rate risk on cash flows, while borrowings, long-term payables and debentures at fixed rates expose the Group to interest rate risk associated with fair value. As at 30 June 2020, if the loan interest rate increases/decreases by 1%, with other factors being constant, the net profit of the Group for the period will decrease/increase by RMB38 million (30 June 2019: RMB23 million). The Group also considers to minimize its interest rate exposure by way of refinancing, renewal of existing borrowings and alternative financing.
Employee and Emolument Policy
As at 30 June 2020, the Group had 2,010 employees. During the reporting period, total remuneration paid to employees of the Group was approximately RMB129.42 million. The Group adopted a wage system in accordance with post ranks. The remuneration of the Company's employees under annual salary system is pegged with his/her post rank and the economic benefits to the Company. The remuneration of the Company's employees under the monthly salary system is pegged with his/her post rank, length of service, education background and skills as well as the economic benefits to the Company.
Contingent Liabilities
The Group did not have any significant contingent liabilities as at 30 June 2020.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

5. Major Events

Rights of Debt
As at 30 June 2020, pursuant to the "Licensed Operation Agreement in respect of the Four Sewage Water Treatment Plants of the Company including Jizhuangzi" entered into between the Group, Tianjin Water Authority Bureau and TCCC which started to perform from 1 January 2014, the total receivables of the Group from Tianjin Water Authority Bureau amounted to RMB2,023 million, representing approximately 25.44% of the total market capital of the Group as at 30 June 2020.
Charge on Assets
During the reporting period, the Group did not create any charges on assets.
Acquisition and Disposal of Subsidiaries
During the reporting period, the Group did not acquire or dispose of any of its Subsidiaries.
Details of Preferred Shares
The Company had no preferred shares during the reporting period.
Repurchase, Sale or Redemption of the Company's Listed Securities
The Company and its subsidiaries did not repurchase, sell or redeem any of the listed securities of the Company during the reporting period.
Model Code for Securities Transactions by the Directors
The Company has adopted a code of conduct regarding the securities transactions carried out by the Directors and Supervisors on the terms exactly the same as the required standards as set out in the Model Code for Securities Transactions by Directors of Listed Issuers as set out in the Appendix 10 to the Listing Rules. The Company, having made specific enquiries to all the Directors and Supervisors, confirmed that all the Directors and Supervisors have complied with the code of conduct regarding the securities transactions by the Directors and Supervisors during the reporting period.

32 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

6. Details of Changes in Ordinary Shares and Shareholders
CHANGES IN SHARE CAPITAL
1. Changes in Shares
  There were no changes in the total number of shares and share capital structure of the Company during the reporting period.

DETAILS OF SHAREHOLDERS
1. Total number of shareholders:

Total number of ordinary shareholders as at the end of the reporting period

73,605

Note: As at 30 June 2020, the total number of shareholders of the Company is 73,605, among which 65 shareholders are shareholders of H shares.

Shareholdings of the top ten shareholders and the top ten shareholders of circulating shares (or shareholders of non-restricted shares) as at the end of the reporting period

		Shareholdings of the top ten shareholders
		Number of
	Increase/decrease	shares held as at		Number of
	during the reporting	the end of the		restricted shares		Nature of the
Name of shareholder (Full Name)	period (shares)	period (shares)	Percentage (%)	held (shares)	Pledged or frozen	shareholder
TMICL	0	715,565,186	50.14	0	None	State-owned legal person
HKSCC Nominees Limited	78,000	337,952,810	23.68	0	Unknown	Other
Central Huijin Asset Management Co., Ltd.	0	14,169,800	0.99	0	None	State-owned legal person
Hong Kong Securities Clearing Company Limited	1,983,428	6,894,016	0.48	0	None	Other
Zhejiang Jinxin Construction Engineering Co., Ltd.	0	3,400,500	0.24	0	None	Domestic non-state-owned
(浙江錦鑫建設工程有限公司)						legal person
Agricultural Bank of China Limited-CSI500 Index Open-	-1,693,300	2,859,652	0.20	0	None	Other
ended Fund (中證500交易型開放式指數證券投資基金)
Ye Ruiqing (葉銳清)	692,000	2,731,700	0.19	0	None	Domestic natural person
Bank of China Limited - Guangfa China Securities	-363,473	2,467,844	0.17	0	None	Other
Environmental Protection Industry Index
Open-ended Fund (廣發中證環保產業交易型
開放式指數證券投資基金)
Shanghai Pudong Development Bank Co., Ltd. - IGW	1,606,481	1,606,481	0.11	0	None	Other
CSI500 Sector Neutral Low Volatility Index Fund
(景順長城中證500行業中性低波動指數型證券投資
基金)
Shenyang Railway Coal Group Co., Ltd.	0	1,500,000	0.11	0	None	State-owned legal person
(瀋陽鐵道煤炭集團有限公司)

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

6. Details of Changes in Ordinary Shares and Shareholders

Shareholdings of the top ten shareholders of non-restricted shares

Type and number of shares

	Number of non-restricted
Name of shareholder	circulating shares held (shares)	Type	Number (shares)
TMICL	715,565,186	Ordinary RMB Shares	715,565,186
HKSCC Nominees Limited	337,952,810	H Shares	337,952,810
Central Huijin Asset Management Co., Ltd.	14,169,800	Ordinary RMB Shares	14,169,800
Hong Kong Securities Clearing Company	6,894,016	Ordinary RMB Shares	6,894,016
Limited
Zhejiang Jinxin Construction Engineering Co.,	3,400,500	Ordinary RMB Shares	3,400,500
Ltd. (浙江錦鑫建設工程有限公司)
Agricultural Bank of China Limited-CSI500	2,859,652	Ordinary RMB Shares	2,859,652
Index Open-ended Fund (中證500交易型開放
式指數證券投資基金)
Ye Ruiqing(葉銳清)	2,731,700	Ordinary RMB Shares	2,731,700
Bank of China Limited - Guangfa China	2,467,844	Ordinary RMB Shares	2,467,844
Securities Environmental Protection Industry
Index Open-ended Fund (廣發中證環保產業交
易型開放式指數證券投資基金)
Shanghai Pudong Development Bank Co., Ltd.	1,606,481	Ordinary RMB Shares	1,606,481
- IGW CSI500 Sector Neutral Low Volatility
Index Fund(景順長城中證500行業中性低波
動指數型證券投資基金)
Shenyang Railway Coal Group Co., Ltd. (瀋陽	1,500,000	Ordinary RMB Shares	1,500,000
鐵道煤炭集團有限公司)

Notes on the connected relationship or parties acting in concert among the above shareholders

It is not certain whether there is any connected relationship among the top 10 shareholders. It is not certain whether there is any connected relationship between the top 10 shareholders of non-restricted circulating shares and the top 10 shareholders.

Note: (1) According to the register of members as provided by HKSCC Nominees Limited, those H shares held by it were held on behalf of various clients. There was no single client who owned 5% or more interest in the total share capital of the Company.

1. The top ten shareholders are not strategic investors of the Company.
Strategic investors or general legal persons becoming the top ten shareholders through share placement
Not applicable

34 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

6. Details of Changes in Ordinary Shares and Shareholders

III. CHANGES IN THE CONTROLLING SHAREHOLDER OR THE ULTIMATE CONTROLLER

Not applicable

IV. SUBSTANTIAL SHAREHOLDERS' AND OTHER PERSONS' INTERESTS AND/OR SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY

As at 30 June 2020, the following entities, other than the Directors, Supervisors or chief executive of the Company, had interests and/or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the "SFO"):

				Approximate
			Approximate	percentage in the
			percentage in the	total issued share
		Number and	relevant class	capital of
Name of shareholder	Capacity	class of securities (Note)	of securities	the Company
TMICL	Beneficial owner	715,565,186 A Shares (L)	65.82%	50.14%
ISIS Asset Management Plc	Investment manager	17,286,000 H Shares (L)	5.08%	1.21%
Citigroup Inc.	Approved lending agent	17,695,581 H Shares (L)	5.20%	1.24%

Note: The letter "L" represents the entity's long positions in the shares. The letter "S" represents the entity's short positions in the shares.

Save as disclosed above, there is no person (other than the Directors, Supervisors or chief executive of the Company) who, as at 30 June 2020, had an interest and/or a short position in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

7. Directors, Supervisors, Senior Management

CHANGES IN SHAREHOLDINGS
1. Changes in shareholdings of the existing and resigned Directors, Supervisors and senior management during the reporting period
  Not applicable
2. Equity incentives granted to Directors, Supervisors and senior management of the Company during the reporting period
  Not applicable
3. Directors', Supervisors' and the Company's chief executives' interests and/or short positions in the shares, underlying shares and debentures of the Company or its associated corporations
  As at 30 June 2020, the interests and/or short positions of the Directors, Supervisors and chief executives of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (as defined in Part XV of the SFO), which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or otherwise, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in the Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

				Approximate percentage
				in the total
			Number and class	issued share capital
	The Company/name of		of securities	of the Company/
Name	associated corporations	Capacity	(Note)	associated corporations
Deputy General Manager				0.000058%
Zhang Jian	The Company	Beneficial owner	822 domestic shares
			(non-restricted circulating shares) (L)

Note: The letter "L" represents the person's long positions in the shares, underlying shares and debentures of the Company or its associated corporations.

Save as disclosed above, none of the Directors, Supervisors or chief executives of the Company, who, as at 30 June 2020, had any interests or short positions in any shares, underlying shares and debentures of the Company or any of its associated corporations (as defined in Part XV of the SFO), which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or otherwise, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, to be notified to the Company and the Stock Exchange.

CHANGES IN DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF THE COMPANY

Name	Position held	Changes
Yu Zhongpeng	Director	Resigned
Gu Wenhui	Director	Appointed
Fu Yana	Senior Management	Resigned
Qi Lipin	Senior Management	Resigned

36 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

8. Details of the Company's Bonds

BASIC DETAILS OF CORPORATE BONDS

							Unit: Yuan	Currency: RMB
Name of Bond	Abbreviation	Code of Bond	Issue Date	Maturity Date	Balance of Bond	Coupon (%)	Debt Service	Trading Place
Public Issue of Corporate	16津創01	136801.SH	25 October	25 October 2021	700,000,000	3.13	Interest shall be paid annually,	SSE
Bonds of Tianjin			2016				while the principal shall be fully
Capital Environmental							repaid upon maturity. Principal
Protection Group							will be repaid upon maturity
Company Limited in							together with interest payable for
2016 (Phase I)							the last period.
Public Issue of Corporate	18津創01	143609.SH	26 April 2018	26 April 2023	1,100,000,000	5.17	Interest shall be paid annually,	SSE
Bonds of Tianjin							while the principal shall be fully
Capital Environmental							repaid upon maturity. Principal
Protection Group							will be repaid upon maturity
Company Limited in							together with interest payable for
2018 (Phase I)							the last period.

During the reporting period, the Company has completed interest payment of "18津創01" for the year 2020 as scheduled, while "16津創01" was not due to pay any interest nor were due to redeem.

Explanation on other circumstances of corporate bond

"16津創01" has no issuer or investor option terms nor special terms such as exchangeable terms. Issuing targets of "16津創01" are eligible investors who satisfy requirements of laws and regulations.

"18津創01" contains terms which offer the issuer's option to adjust the coupon rate and investors' put option but does not have other special terms such as exchangeable terms. During the reporting period, both the issuer's option to adjust the coupon rate and investors' put option were not triggered for "18津創01". Issuing targets of "18津創01" are eligible investors who satisfy requirements of laws and regulations.

CONTACT PERSON AND MEANS OF COMMUNICATION OF CORPORATE BOND TRUSTEE AND MEANS OF COMMUNICATION OF CREDIT RATING AGENCY

Bond trustee	Name	Ping An Securities Co., Ltd.
	Office address	16/F, North Tower, Financial Street Centre, 9 Financial Street, Xicheng District, Beijing
	Contact person	Li Chuan, Jia Xuan
	Contact number	010-56800258
Credit rating agency	Name	United Credit Rating Co., Ltd.
	Office address	12th Floor, PICC Office Tower, No.2 Jianguomen Outer Street, Chaoyang District, Beijing

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

8. Details of the Company's Bonds

III. USE OF PROCEEDS FROM BOND OFFERING

Scale of issue of "16津創01" reached RMB700 million, the proceed reached RMB697.2 million (net of underwriting fees). As at the end of the reporting period, the proceed was fully utilized as intended as mentioned in the prospectus and the remaining amount was nil.

Scale of issue of "18津創01" reached RMB1,100 million, the proceed reached RMB1,097.36 million (net of underwriting fees).

As at the end of reporting period, RMB1,097,337,730.48 of the proceed was utilized as intended as mentioned in the prospectus and the remaining amount was RMB22,269.52.

During the reporting period, the proceed account operates well.

The Company strictly follows its capital management system and relevant laws and regulations and executes relevant procedures of use of proceed, and the use of proceeds is in line with intended use as mentioned in the prospectus, plan of use, and other arrangements.

IV. BOND RATING OF THE COMPANY

On 19 May 2020, United Credit Rating Co., Ltd. completed ongoing credit rating for the Company, "16津創01" and "18 津

創01"; long term credit of the Company maintained at "AA+", the credit rating outlook maintained at "stable", credit rating of the bond loans, "16津創01" and "18津創01", maintained at "AA+". Investors should be aware that relevant disclosure will be made in the Shanghai Stock Exchange website.
CORPORATE BOND CREDIT ENHANCEMENT MECHANISM, DEBT REPAYMENT SCHEDULE, AND OTHER RELEVANT INFORMATION DURING THE REPORTING PERIOD

During the reporting period, both repayment schedule and repayment protection mechanism of "16津創01" and "18 津創01" were well executed and were in line with the arrangement and underlying undertakings as mentioned in the prospectus. There were no changes in that regard. The Company has set up a specialized repayment account for the said corporate bond and has completed withdrawal for such specialized repayment account in accordance with the undertakings as stated in the prospectus.

VI. CONVENING OF MEETINGS OF BONDHOLDERS

Not applicable

38 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

8. Details of the Company's Bonds

VII. PERFORMANCE OF CORPORATE BOND TRUSTEE

During the term of the corporate bonds, the corporate bond trustee strictly complies with the arrangement stated in the "Corporate Bond Trustee Agreement" and performs ongoing tracking on credit condition, management on use of proceed fund and corporate bond interest payment of the Company. It has also ensured that the Company performed obligations as stipulated in the corporate bond prospectus. The corporate bond trustee actively performed its responsibilities and protected the legal rights of bondholders.

Investors should be aware that corporate bond trustee has issued its corporate bond trustee management report of Tianjin Capital Environmental Protection Group Company Limited (2019) on 30 June 2020 and has disclosed on the Shanghai Stock Exchange website(www.sse.com.cn).

VIII. ACCOUNTING DATA AND FINANCIAL INDICATORS AS OF THE END OF THE REPORTING PERIOD AND AS OF THE END OF LAST YEAR (OR DURING THE CURRENT REPORTING PERIOD AND DURING THE SAME PERIOD LAST YEAR)

				Unit: Yuan Currency: RMB
			Increase/decrease
			as at the end of the
			current reporting
	As at the end of the	As of the end	period as compared to
Major Indicators	current reporting period	of last year	the end of last year (%)	Reasons
Current ratio	1.74	1.35	28.89	Short-term borrowings and
				non-current liabilities due
				within one year sharply
				decreased
Quick ratio	1.73	1.35	28.15	Short-term borrowings and
				non-current liabilities due
				within one year sharply
				decreased
Assets liability ratio (%)	60.30	60.30	0	Not applicable
Debt service ratio (%)	100	100	0	Not applicable
			Increase/decrease for
			the current reporting
	During the current		period as compared to
	reporting period	During the same	the same period
	(from January to June)	period last year	last year (%)	Reasons
EBITDA interest protection	5.86	4.25	37.88	The Company's profits
multiples				increased as compared to the
				same period last year
Interest coverage rate (%)	100	100	0	Not applicable

IX. EXPLANATION ON OVERDUE DEBTS

Not applicable

REDEMPTION OF OTHER BONDS AND DEBT FINANCING INSTRUMENTS OF THE COMPANY

Not applicable

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

8. Details of the Company's Bonds

XI. BANK CREDIT OF THE COMPANY DURING THE REPORTING PERIOD

As at the end of the reporting period, the Company has obtained, in aggregate, a credit facility of approximately RMB13.092 billion from various banks, of which approximately RMB3.301 billion was utilized with a remaining balance of approximately RMB9.791 billion. During the reporting period, the Company has repaid each bank loan as scheduled and there is no renewal or concession for such loans.

XII. PERFORMANCE OF RELEVANT AGREEMENT OR COMMITMENT OF THE CORPORATE BOND PROSPECTUS BY THE COMPANY DURING THE REPORTING PERIOD

During the reporting period, the Company has strictly performed the relevant agreements and commitments as set out in its bond prospectus. This is no major impact to the bondholders.

XIII. MAJOR ISSUES OF THE COMPANY OCCURRED AND THEIR EFFECT ON THE OPERATION AND SOLVENCY OF THE COMPANY

As at the end of 2019, the cumulative new borrowings accounted for more than 20% of the net assets at the end of 2018, meeting the threshold for the information disclosure obligation. The above situation is within the scope of the Company's normal operation activities. The financial position of the Company is stable. At present, principal and interests of all our debts are repaid on time. The above new borrowings will not adversely affect the Company's operating condition and solvency.

40 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Interim Condensed Consolidated Statement of Comprehensive Income

As at 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

		Unaudited
		Half-year
	Notes	2020			2019
		RMB' 000	RMB' 000
Continuing operations
Revenue	3(a)	1,521,390			1,224,716
Tax expenses and surcharge		(22,178)		(18,907)
Cost of sales		(1,043,229)		(817,630)
Gross profit		455,983			388,179
Other income	3(a)	73,977				60,744
Other (losses)/gains - net		(2,585)		1,370
Administrative expenses		(70,253)		(68,032)
Distribution costs		(7,922)		(1,987)
Net impairment losses on financial assets		-		98
Operating profit	4	449,200			380,372
Finance income		12,328				10,980
Finance expenses		(125,315)		(104,103)

Finance expenses - net	5	(112,987)		(93,123)

Profit before income tax		336,213			287,249
Income tax expense	6	(59,172)		(56,154)

Profit from continuing operations		277,041			231,095
Total comprehensive income for the half-year		277,041			231,095
Profit/Total comprehensive income for the half-years is attributable to:


- Owners of the Company		256,948			218,503
- Non-controlling interests		20,093				12,592

		277,041			231,095
Earnings per share for profit attributable to the ordinary equity holders of the Company


(in RMB per share)
- Basic earnings per share		0.18			0.15
- Diluted earnings per share		0.18			0.15


Interim dividends	7	-	-

The notes on page 46 to 68 form an integral part of this condensed consolidated interim financial information.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Interim Condensed Consolidated Balance Sheet

For the Half-Year of 2020 (All amounts in RMB thousand unless otherwise stated)

	Notes	30 June 2020	31 December 2019
		Unaudited	Audited
		RMB' 000	RMB' 000
ASSETS
Non-current assets
Property, plant and equipment	8	820,655		801,007
Intangible assets	8	11,771,490		11,701,362
Deferred income tax assets		4,208		4,209
Right-of-use assets	8	58,719		58,080
Investments accounted for using the equity method	9	195,000		195,000
Financial asset at fair value through other comprehensive income		2,000		2,000
Long-term receivables	11	226,428		236,450
Other non-current assets		236,230		195,919

Total non-current assets		13,314,730		13,194,027
Current assets
Inventories		14,211		14,805
Trade receivables	10	2,995,860		2,508,895
Other current assets		117,051		89,728
Other receivables		33,899		65,156
Prepayments		45,718		38,583
Cash and cash equivalents		1,791,824		2,066,301
Restricted cash		9,413		13,312
Total current assets		5,007,976		4,796,780

Total assets		18,332,706		17,990,807

The notes on page 46 to 68 form an integral part of this condensed consolidated interim financial information.

42 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Interim Condensed Consolidated Balance Sheet

For the Half-Year of 2020

(All amounts in RMB thousand unless otherwise stated)

	Notes	30 June 2020	31 December 2019
		Unaudited	Audited
		RMB' 000	RMB' 000
LIABILITIES
Non-current liabilities
Borrowings	13	5,959,115		5,066,797
Deferred revenue	14	2,033,194		2,059,702
Deferred income tax liabilities	15	125,825		125,587
Other non-current liabilities		36,000		36,000
Provisions for other liabilities and charges	16	11,665		11,665

Total non-current liabilities		8,165,799		7,299,751
Current liabilities
Trade payables	17	269,513		231,293
Contract liabilities	17	584,519		558,472
Wages payables		23,797		66,100
Income tax and other taxes payables	17	44,889		86,188
Dividend payable		150,876		1,172
Other payables	17	1,271,208		1,532,842
Borrowings	13	525,114		1,059,869
Provisions for other liabilities and charges		12,570		12,933
Total current liabilities		2,882,486		3,548,869

Total liabilities		11,048,285		10,848,620
Net assets		7,274,421		7,142,187
EQUITY


Capital and reserves attributable to the Company's equity holders
Share capital	12	1,427,228		1,427,228
Other reserves		989,274		989,274
Retained earnings		3,861,758		3,757,523
		6,278,260		6,174,025
Non-controlling interests		996,161		968,162

Total equity		7,274,421		7,142,187

Liu Yujun

Niu Bo

The notes on page 46 to 68 form an integral part of this condensed consolidated interim financial information.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Interim Condensed Consolidated Statement of Changes in Equity

For the Half-Year of 2020 (All amounts in RMB thousand unless otherwise stated)

					Unaudited

	Attributable to owners of the Company
									Non-

			Other	Retained				controlling
	Share capital	Reserves	Earnings	Sub-Total	interests	Total Equity
	RMB' 000	RMB' 000	RMB' 000	RMB' 000	RMB' 000	RMB' 000
Balance at 1 January 2019	1,427,228		948,131		3,442,844			5,818,203	796,764	6,614,967

-Profit for the half-year	-		-	218,503		218,503	12,592	231,095

Total comprehensive income for the half-year	-		-	218,503		218,503	12,592	231,095
Transactions with owners in their capacity as owners:
-		-	-	-
-Non-controlling interest on setting up subsidiary	129,224	129,224
-Dividends provided for or paid	-	-	(151,286)		(151,286)	(391)	(151,677)

	-	-	(151,286)		(151,286)	128,833	(22,453)

Balance at 30 June 2019	1,427,228		948,131	3,510,061		5,885,420	938,189	6,823,609


Balance at 31 December 2019	1,427,228		989,274	3,757,523		6,174,025	968,162	7,142,187

-Profit for the half-year	-		-	256,948		256,948	20,093	277,041

Total comprehensive income for the half-year	-		-	256,948		256,948	20,093	277,041
Transactions with owners in their capacity as owners:
-	-	-	-
-Non-controlling interest on setting up subsidiary	12,706	12,706
-Dividends provided for or paid	-	-	(152,713)		(152,713)	(4,800)	(157,513)

	-		-	(152,713)		(152,713)	7,906	(144,807)

Balance at 30 June 2020	1,427,228		989,274	3,861,758		6,278,260	996,161	7,274,421

The notes on page 46 to 68 form an integral part of this condensed consolidated interim financial information.

44 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Interim Condensed Consolidated Statement of Cash Flow

For the Half-Year of 2020

(All amounts in RMB thousand unless otherwise stated)

	Unaudited
	Half-year
	2020			2019
	RMB' 000	RMB' 000
Cash flows from operating activities
Cash generated from operations	322,717			770,279
Income tax paid	(83,079)		(81,360)
Bank deposit interest received	15,455			6,221

Net cash inflow from operating activities	255,093			695,140
Cash flows from investing activities
Payments for property, plant and equipment, intangible assets	(767,970)		(1,280,910)
Proceeds on disposal of property, plant and equipment	49			30
Increase in restricted cash	3,899			1,274
Government grants received	6,207			34,567

Net cash outflow from investing activities	(757,815)		(1,245,039)
Cash flows from financing activities

Repayments of bank borrowings	(1,241,626)		(496,037)
Dividends paid to Company's shareholders	(7,809)		(978)
Interest paid	(132,590)		(111,076)
Proceeds from bank borrowings	1,597,564			1,244,516
Capital contributions by non-controlling interests	12,706			129,224

Net cash inflow from financing activities	228,245			765,649

Net (decrease)/increase in cash and cash equivalents	(274,477)		215,750
Cash and cash equivalents at the beginning of the half-year	2,066,301			1,808,543

Cash and cash equivalents at the end of the half-year	1,791,824			2,024,293

The notes on page 46 to 68 form an integral part of this condensed consolidated interim financial information.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

1 COMPANY PROFILE AND PRINCIPAL ACTIVITIES

Tianjin Capital Environmental Protection Group Company Limited (the 'Company') was established on 8 June 1993 in Tianjin, the People's Republic of China (the 'PRC') as a joint stock limited liability company. The holding company and the ultimate holding company of the Company are Tianjin Municipal Investment Company Limited ('Municipal Investment') and Tianjin City Infrastructure Construction and Investment Group Company Limited ('City Infrastructure Construction and Investment') respectively. The address of its registered office is No.45 Guizhou Road, Heping District, Tianjin. The Company's H-shares are listed on The Stock Exchange of Hong Kong Limited and the A-shares are listed on The Shanghai Stock Exchange.

The principal activities of the Company and its subsidiaries (collectively the 'Group') include processing of sewage water, construction and management of related facility, supply of tap water and recycled water and supply of heating and cooling as described below:

Processing of sewage water

Pursuant to relevant agreements ('Service concession right agreements'), the Group currently provides sewage water processing services via the following plants:

Plant	Location	Agreement date	Customer
Guiyang	Guizhou	16 September 2004	Guiyang City Administration Bureau
Baoying	Jiangsu	13 June 2005	Baoying Construction Bureau
Chibi	Hubei	15 July 2005	Chibi Construction Bureau
Fuyang	Anhui	18 December 2005	Anhui Fuyang Construction Committee
Qujing	Yunnan	25 December 2005	Qujing City Water General Company
Honghu	Hubei	29 December 2005	Honghu Construction Bureau
Hangzhou	Zhejiang	20 November 2006	Hangzhou Municipal Facilities Supervision Center
Jinghai	Tianjin	12 September 2007	Tianjin Tianyu Science Technology Park
Wendeng	Shandong	19 December 2007	Wendeng Construction Bureau
Xi'an	Shaanxi	18 March 2008	Xi'an Infrastructure Investment Group
Anguo	Hebei	14 October 2008	Anguo Municipal Government
Xianning	Hubei	16 October 2008	Xianning Construction Committee
Yingdong	Anhui	10 August 2009	Fuyang Yingdong Construction Bureau
Qujing	Yunnan	16 August 2011	QuJing Housing and Urban Construction Bureau
Chaohu	Anhui	25 August 2011	Hanshan Housing and Urban Construction Bureau
Jingu	Tianjin	18 February 2014	Tianjin Urban-rural Construction Commission ('TUCC')
			and Tianjin Water Authority Bureau('TWAB')
Xianyanglu	Tianjin	18 February 2014	TUCC and TWAB
Dongjiao	Tianjin	18 February 2014	TUCC and TWAB
Beicang	Tianjin	18 February 2014	TUCC and TWAB
Yingshang	Anhui	16 June 2016	Yingshang Housing and Urban-rural Construction Bureau
Karamay	Xinjiang	4 November 2016	Karamay Construction Bureau
Linxia	Gansu	13 May 2017	Linxia Housing and Urban-rural Construction Bureau
Changsha	Hunan	5 June 2017	Ningxiang Economic and Technological Development
			Zone Management Committee
Hefei	Anhui	16 June 2017	Hefei Urban-Rural Construction Committee
Dalian	Liaoning	1 November 2017	Dalian Construction Bureau
Bayannur	Inner Mongolia	12 December 2017	Bayannur Water Authority Bureau and Bayannur River
			Water Group Company Limited

46 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

1 COMPANY PROFILE AND PRINCIPAL ACTIVITIES (Continued)

Processing of sewage water (Continued)

Plant	Location	Agreement date	Customer
Changsha	Hunan	27 April 2018	Ningxiang Economic and Technological Development
			Zone Management Committee
Honghu	Hubei	9 June 2018	Honghu Housing and Urban - rural Construction Bureau
Shibing	Guizhou	12 July 2018	Shibing Water Authority Bureau
Deqing	Zhehejiang	21 November 2018	Deqing Qianyuan Municipal Government
Hefei	Anhui	28 November 2018	Hefei Urban-rural Construction Commission
Gaocheng	Hebei	2 April 2019	Hebei Gaocheng Economic Development Zone
			Management Committee
Jiuquan	Gansu	22 June 2019	Jiuquan Suzhou Municipal Government
Yingdong	Fuyang	26 August 2019	Fuyang Urban-rural Construction Commission
Huoqiu	Anhui	2 Jan 2020	Huoqiu Housing and Urban - rural Construction
			Bureau
Huize	Yunnan	24 Feb 2020	Huize Housing and Urban - rural Construction Bureau

Based on the sewage water processing agreements and the supplemental agreements, initial prices for sewage water processing are predetermined, thereafter processing prices may be revised taking into account various factors including renovation of equipment, additional investment, power and energy and labour force, and significant changes in government policy.

Supply of tap water
Pursuant to the relevant agreements, the Group provides tap water supply service initially at pre-determined price and the prices as pre-determined may be revised subsequently taking into account various cost factors.
Recycled water supply and pipeline connection
The Group's recycled water business includes developing, constructing and operating of recycled water projects, production and sale of recycled water, and provision of related research and development and technical consultation services.
Heating and cooling supply services
The heating and cooling supply services include design, construction, operations and transfer of centralised heating and cooling infrastructures; and provision of heating and cooling supply services.
The Group has signed several service concession agreements with several customers of providing heating and cooling supply services to third parties.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

COMPANY PROFILE AND PRINCIPAL ACTIVITIES (Continued)
1. Waste treatment and disposal service
  The Group's waste treatment and disposal service includes hazardous wastes and general solid waste. Currently, the Group conducts the disposal by way of incineration, landfill, and physicochemical treatment and solidify.
  This condensed consolidated interim financial information was approved for issue on 26 August 2020.
  This condensed consolidated financial information has not been audited.
SIGNIFICANT CHANGES IN THE CURRENT REPORTING PERIOD

In this period, the Group operated its business smoothly. With winning the bidding of two water projects, Group set up Huoqiu Capital Sewage Water Processing Co., Ltd. and Huize Capital Sewage Water Co., Ltd. The Group will continue to focus on process of sewage water, new energy, hazardous waste treatment and other environmental services.

The financial position and performance of the Group was particularly affected by the following events and transactions during the six months to 30 June 2020:

an increase in revenue as the result of the increase of the processing quantity of different franchising project (note 3).

48 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

3 REVENUE AND SEGMENT INFORMATION

An analysis of sales and contributions to operating profit for the period by principal operations is as follows:

Analysis of the Group's turnover and other income

	Unaudited
	Half-year
	2020		2019
	RMB' 000	RMB' 000
Revenue from contracts with customers (Note 3(b))	1,521,390		1,224,716
Other income	73,977		60,744

	1,595,367		1,285,460

Operating segment analysis
Management has determined the operating segments based on the reports reviewed by the strategy steering committee held regularly that are used to make strategic decisions for the purpose of allocating resources and assessing performance.
The strategy steering committee meeting considers the business primarily from service perspective and for the significant business segment geographical perspectives will also be considered. From a service perspective, management assesses the performance of processing of sewage water, recycled water and pipeline connection, heating and cooling services, tap water operations and sale of environmental protection equipment. Processing of sewage water is further evaluated on a geographical basis (Tianjin plants, Hangzhou plant and other plants). The environmental protection equipment is mainly the achievement of technology research. The assets are allocated based on the operations of the respective segments and the physical location of assets. The liabilities are allocated based on the operations of the respective segment. Expenses indirectly attributable to each segment are allocated to the segments based on the proportion of each segment's revenue.
The strategy steering committee assesses the performance of the operating segments based on a measure of profit before income tax, which is measured in the approach consistent with that in the financial statements.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

3 REVENUE AND SEGMENT INFORMATION (Continued)

Operating segment analysis (Continued)
1. For the half-year ended 30 June 2020 (Unaudited)

	Sewage water processing
								Recycled							Sale of
								water and	Heating and			environmental
	Tianjin	Hangzhou	Other	pipeline		cooling	Tap water		protection	All other
	plants	plant	plants	connection		services	operations		equipment	segments	Group
	RMB'000	RMB'000	RMB'000	RMB'000		RMB'000	RMB'000		RMB'000	RMB'000	RMB'000
Segment revenue	600,633		119,374			373,267		136,733		46,057		46,924		13,571		184,831	1,521,390
Timing of revenue recognition:	-	-	-	-		-	-		-
At a point in time			13,916		13,916
Over time	600,633		119,374			373,267		136,733	46,057	46,924	13,571	170,915	1,507,474
Segment expense	(435,728)	(83,345)		(333,340)	(79,114)	(33,461)	(40,430)	(8,312)	(171,446)	(1,185,176)
Results before share of profits
of an associate																			336,214
Profit before income tax
																		336,214
Income tax expense																			(59,172)
Profit for the period
																		277,042
Segment assets	6,658,384		966,138		6,907,391	1,007,088	683,714	545,339	60,874	1,298,778	18,127,706
Investment accounted for using
the equity method																			195,000
Total assets																			18,322,706
Total liabilities
5,867,468		224,864		3,159,769	907,021	342,097	89,974	8,567	448,525	11,048,285
Other information
- Interest income	2,307		664		1,875	2,148	256	17	201	4,860	12,328
- Interest expenses	(92,732)	(2,945)		(29,141)	-	(1,300)	(464)		-	-	(126,582)
- Depreciation	(237)	-	(688)	(15,791)	(662)	(56)	(378)	(8,140)	(25,952)
- Amortization	(87,321)	(30,480)		(108,396)	(3,116)	(12,010)	(10,095)	(1)	(1,537)	(252,956)
- Capital expenditures	1,518		-	305,179	1,070	14,104	1,479		-	46,259	369,609

50 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

3 REVENUE AND SEGMENT INFORMATION (Continued)

Operating segment analysis (Continued)
1. For the half-year ended 30 June 2019 (Unaudited)

	Sewage processing and facility
			construction services			Recycled							Sale of

								water and	Heating and			environmental
	Tianjin		Hangzhou	Other	pipeline		cooling	Tap water		protection	All other
	plants		plant	plants	connection		services	operations		equipment	segments	Group
	RMB'000		RMB'000	RMB'000	RMB'000		RMB'000	RMB'000		RMB'000	RMB'000	RMB'000
Segment revenue	458,172		120,167	292,961	137,078	40,417	49,703	18,493	107,725	1,224,716
Timing of revenue recognition:	-		-	-	-		-	-		-	-	-
At a point in time
Over time	458,172		120,167	292,961	137,078	40,417	49,703	18,493	107,725	1,224,716
Segment expense	(332,824)	(89,973)	(222,315)	(91,113)	(33,371)	(37,868)	(10,315)	(119,688)	(937,467)
Results before share of profits
of an associate														287,249
Profit before income tax														287,249
Income tax expense														(56,154)
Profit for the period														231,095
Segment assets	5,936,592		1,055,436	5,782,445	1,221,492	677,580	423,103	67,951	1,096,569	16,261,168
Investment accounted for using

the equity method														195,000

Total assets														16,456,168
Total liabilities	5,631,437		291,927	2,264,608	596,566	349,901	92,867	10,047	395,206	9,632,559
Other information
- Interest income	1,459		1,004	157	7,384	487	18	376	95	10,980
- Interest expenses	(65,737)	(4,936)	(34,084)	(25)	(1,140)	(668)		-	-	(106,590)
- Depreciation	(109)		-	(837)	(17,698)	(188)	(48)	(503)	(2,684)	(22,067)
- Amortization	(63,267)	(26,016)	(84,695)	(2,968)	(11,344)	(7,683)	(1)	(1,328)	(197,302)
- Capital expenditures	12,742			-	515,617	929	32,613	44,798	52	130	606,881

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

4	OPERATING PROFIT
	Operating profit is stated after (crediting)/charging the following:
		Unaudited
		Half-year
		2020		2019
		RMB' 000	RMB' 000
	Crediting:
	Rental of investment properties	(392)		(751)
	Charging:

	Depreciation and amortisation expenses	278,908		219,369
	Staff costs	155,942		149,479
	Raw materials and consumables used	167,362		146,312
	Repair and maintenance expenses	49,135			46,456

5	FINANCE EXPENSES  NET
			Unaudited
			Half-year
			2020			2019
			RMB' 000	RMB' 000
	Interest expenses of borrowings	126,582			106,590

	Less: Interest income	(12,328)		(10,980)
	- long-term receivables		(4,315)		(4,759)
	- bank deposits		(8,013)		(6,221)
	Others	(1,267)		(2,487)

			112,987			93,123

52 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

6 INCOME TAX EXPENSE

No Hong Kong profits tax has been provided as the Group has no assessable profit in Hong Kong as at 30 June 2020 (30 June 2019: Nil). Taxation on overseas profits has been calculated on the estimated assessable profit for the period at the rates of taxation prevailing in the countries in which the Group operates.

Tax charges comprises:

	Unaudited
	Half-year
	2020		2019
	RMB' 000	RMB' 000
Current income tax	58,934		53,596
Deferred income tax	238		2,558

	59,172		56,154

Reconciliation between profit before income tax and the aggregate tax at the rates applicable to profits in the respective entities concerned is set below:

	Unaudited
	Half-year
	2020			2019
	RMB' 000	RMB' 000
Profit before tax	336,213			287,249

Calculated at applicable income tax rate	84,053			71,812
Effect of preferential tax rate applicable to certain subsidiaries	-	-
Income not subject to tax	(12,871)		(8,234)
Expenses not deductible for taxation purposes	85			3,136
Utilisation of previously deductible tax losses for which no deferred
income tax assets was recognized	(168)		(249)
Current year deductible temporary differences for which no deferred
income tax asset was recognised	4,102		5,612
Current year tax losses for which no deferred income tax asset was recognised	(16,029)		(15,923)

Income tax expense	59,172			56,154

7 INTERIM DIVIDENDS

No interim dividend was proposed by the Board of Directors of the Company for the half-year ended 30 June 2020 (30 June 2019: Nil).

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

8 PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS, AND RIGHTOFUSE ASSETS

	Property, plant and
	equipment	Intangible assets (a)	Right-of-use assets
	RMB' 000	RMB' 000	RMB' 000
At 31 December 2019 (Audited)
Cost	1,211,462		14,248,862		65,445
Accumulated depreciation and amortisation	(410,455)	(2,547,500)	(7,365)
Net book amount
801,007		11,701,362		58,080
Half-year ended 30 June 2020 (Unaudited)
Opening net book amount	801,007		11,701,362		58,080
Additions	361,972		5,657		1,981
Disposals	(292)	-	-
Depreciation and amortisation	(25,947)	(251,614)	(1,342)
Transfer from investment properties	-	316,085	-
Transfer to intangible assets	(316,085)	-	-

Closing net book amount	820,655		11,771,490		58,719

At 30 June 2020
Cost	1,257,057		14,570,604		67,426
Accumulated depreciation and amortisation	(436,402)	(2,799,114)	(8,707)

Net book amount	820,655		11,771,490		58,719

Concession rights with net book value of RMB2,589 million (31 December 2019: 2,646 million) have been secured against loans.

9 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Summarised financial information for Bihai Sponge City

		Unaudited	Audited
		30 June 2020	31 December 2019
		RMB' 000	RMB' 000
Net book value of investments	195,000		195,000
Attributable comprehensive income for the year:
-	-
- Net loss i)
- Other comprehensive income i)	-	-

Total comprehensive income	-	-

Net loss and other comprehensive income includes the fair value adjustment of the identifiable assets and liabilities upon investment, and the effect of change in accordance with the Group's accounting policy.

54 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

10	TRADE RECEIVABLES
	Details of the trade receivables are as follows:
		Unaudited	Audited
		30 June 2020	31 December 2019
		RMB' 000	RMB' 000
	Receivables from third parties
	- Trade receivables	3,003,780		2,508,246
	- Notes receivable	9,087		16,131
	Receivables from third parties	3,012,867		2,524,377
	Receivables from related parties	63,949		65,474

		3,076,816		2,589,851
	Less: loss allowance for impairment of trade receivables	(80,956)	(80,956)

		2,995,860		2,508,895

The aging of trade receivables is analysed below:

	Unaudited	Audited 31
	30 June 2020	31 December 2019
	RMB' 000	RMB' 000
Within 1 year	2,206,818		1,854,529
1 to 2 years	763,540		641,788
2 to 3 years	70,127		52,987
3 to 4 years	18,404		15,037
4 to 5 years	6,950		7,947
Over 5 years	1,890		1,432
Total	3,067,729		2,573,720

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

11 LONGTERM RECEIVABLES

	Unaudited	Audited
	30 June	31 December
	2020	2019
	RMB' 000	RMB' 000
Receivables from toll road concession	245,202	253,812
Less: loss allowance for impairment of long-term receivables	(138)	(138)

	245,064		253,674
Less: non-current assets due within one year	(18,636)	(17,224)

	226,428		236,450

The Group receives toll road fee from Tianjin Municipal and Highway Management Bureau (the 'Bureau') over the concession period till 2029. Receivables from toll road concession represent the amortized cost, using effective interest method, calculated with reference to a guaranteed minimum future traffic flow over the concession period.

The Bureau is a public institution of Tianjin Municipal Government. The credit risk level of the Bureau is low. Base on past experience, the receivables can be collected within agreed period. Therefore, the Company estimates that the ECL rate of this receivable item is 0.05%.

12 SHARE CAPITAL

Movement of the Company's authorised, issued and fully paid up capital is set out below. All of the Company's shares are ordinary shares with par value of RMB1.

	Circulating		Circulating
	A-shares		H-shares		Total	Total share capital
	RMB' 000		RMB' 000		RMB' 000	RMB' 000
At 31 December 2019 (Audited) and at 30 June 2020
(Unaudited)	1,087,228	340,000	1,427,228	1,427,228

A - shares represent shares listed on The Shanghai Stock Exchange and H-shares represent shares listed on the Main Board of The Stock Exchange of Hong Kong Limited. All the A-shares and H-shares rank pari passu in all respects.

There is no movement in the Group's issue A-share and H-share during the half-year ended 30 June 2020 and 2019.

56 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

13	BORROWINGS
			Unaudited	Audited
		Notes	30 June	31 December
			2020		2019
			RMB' 000	RMB' 000
	Non-current liabilities:
	Long-term bank borrowings	(a), (b)	4,403,674		3,818,136
	Less: Current portion	(a), (b)	(497,415)	(811,380)
			3,906,259		3,006,756
	Debentures	(c)	1,823,180		1,840,363
	Less: Current portion	(c)	(25,279)	(42,974)
			1,797,901		1,797,389
	Long-term payables	(d)	282,654		290,891
	Less: Current portion	(d)	(27,699)	(28,239)
			254,955		262,652


	Total non-current borrowings		5,959,115		5,066,797
	Current liabilities:
	Current portion of long-term bank borrowings	(a)	497,415		811,380
	Current portion of long-term payables	(d)	27,699		28,239
	Short-term bank borrowings	(e)	-	200,000

			525,114		1,039,619
	Other current liabilities	(e)	-	20,250
	Total current borrowings		525,114		1,059,869


	Total borrowings		6,484,229		6,126,666

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

13 BORROWINGS (Continued)

Long-termbank borrowings
Movement of long-term bank borrowings is analyzed as follows:

Unaudited

RMB' 000

Half-year ended 30 June 2020 Opening amount as at 1 January 2020 Proceeds of new borrowings Repayments of borrowings

Closing amount as at 30 June 2020

Half-year ended 30 June 2019 Opening amount as at 1 January 2019 Proceeds of new borrowings Repayments of borrowings

Closing amount as at 30 June 2019

3,818,136

1,597,564

(1,012,026)

4,403,674

2,265,905

1,244,516

(485,511)

3,024,910

These borrowings mature as follows:

	Less	Between 1	Between 2
	than 1 year	and 2 years	and 5 years	Over 5 years	Total
	RMB' 000	RMB' 000	RMB' 000	RMB' 000	RMB' 000
As at 30 June 2020 (Unaudited)
Long-term bank borrowings	497,415		607,583		1,215,844	2,082,832	4,403,674
As at 31 December 2019 (Audited)


Long-term bank borrowings	811,380		684,304		995,356	1,327,096	3,818,136

58 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

13 BORROWINGS (Continued)

Summary of terms of long-term bank borrowings:

	Unaudited	Audited
	30 June	31 December
	2020		2019
	RMB' 000	RMB' 000
Long-term bank borrowings:
Secured	923,394	763,762
Guaranteed	2,515,080	1,904,374
Unsecured	965,200	1,150,000
	4,403,674		3,818,136

	Audited						Unaudited
	31 December					Due within	30 June
	2019		Amortization	Additions	1 year	2020
	RMB' 000	RMB' 000	RMB' 000	RMB' 000		RMB' 000
Debentures payable			-	-	-
- par value	1,800,000		1,800,000
- transaction cost	(2,611)	-	-	512	(2,099)

	1,797,389		-	-	512	1,797,901

On 25 October 2016, the Company issued a long-term bond at par value of RMB700 million on The Shanghai Stock Exchange. The fixed interest rate of 3.13% has been accrued and settled per annum. The bond will be due for repayment on 25 October 2021. The principal will be repaid on maturity.

On 25 Apr 2018, the Company issued a debenture at par value of RMB1,100 million on The Shanghai Stock Exchange. The fixed interest rate of 5.17% has been accrued and settled per annum. The debenture will be due for repayment on 25 Apr 2023. The principal will be repaid on maturity.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

13 BORROWINGS (Continued)

Long-termpayables and current portion of long-term payables

	Unaudited	Audited
	30 June 2020	31 December 2019
	RMB' 000	RMB' 000
			Unrecognized		Unrecognized
	Payable		financial charges	Payable	financial charges
Payable to Sewage Company for assets acquisition	439,939	(157,285)	445,444	(154,553)

Summary of terms of long-term payable above:

		Original		Effective	Ending	Due within
	Maturity date	balance		interest rate	balance	1 year
		RMB' 000			RMB' 000	RMB' 000
Sewage Company	20 March 2041	430,314	5.94%	282,654	27,699

The balance of the long-term payables to Sewage Company is the consideration payable in respect of the acquisition of sewage processing assets from Sewage Company, net of unrecognised financing charges.

Pursuant to the 'Assets transfer agreement from foreign banks loans about Haihe River Tianjin sewage processing project and Beicang sewage processing project', Sewage Company sold to the Company certain sewage processing assets. The first instalment of RMB261 million settled in cash and the remaining amount is to be settled on a quarterly basis in RMB translating at exchange rates prevailing on each repayment date over the remaining years. The fair value of the initial recognition of the payable balance was at fair value assessed based on discounted future cash payments and the discount rate of 5.94%.

The payable amounts of long-term payables (including interest) are denominated in the following currencies.

	Unaudited	Audited
	30 June	31 December
	2020	2019
	RMB' 000	RMB' 000
JPY	207,660		205,685
US dollar	74,994		85,206
	282,654		290,891

The balance denominated in US dollar bears an interest rate at 6 month LIBOR plus 0.6%, the balance denominated in JPY bears fixed interest rates of 1% and 1.55% per annum respectively.

60 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

13 BORROWINGS (Continued)

Short-termbank borrowings
Movement of bank borrowings is analyzed as follows:

Unaudited

RMB' 000

Half-year end 30 June 2020 Opening amount as at 1 January 2020 Proceeds of new borrowings Repayments of borrowings

Closing amount as at 30 June 2020

200,000

Summary of current portion of short-term borrowings by terms:

	Unaudited		Audited
	30 June 2020		31 December 2019
	RMB' 000		RMB' 000
Unsecured	-	200,000

The carrying amounts of the Group's borrowings are denominated in RMB.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

13 BORROWINGS (Continued)

As at 30 June 2020, the contractual maturities of the group's non-derivative financial liabilities were as follows:

	Less	Between 1	Between 2					Carrying
	than 1 year	and 2 years	and 5 years	Over 5 years	Total	value
	RMB' 000	RMB' 000	RMB' 000	RMB' 000	RMB' 000	RMB' 000
As at 30 June 2020 (Unaudited)
Long-term bank borrowings	735,646		784,316		1,709,009		2,437,893		5,666,864		4,403,674
Long-term payables	33,240		34,288		110,480		261,931		439,939	282,654
Trade payables	269,513	-	-	-	269,513	269,513
Other payables	1,422,084	-	-	-	1,422,084	1,422,084
Debentures	78,780	764,173	1,147,392	-	1,990,345	1,797,901

	2,539,263		1,582,777	2,966,881	2,699,824	9,788,745	8,175,826
As at 31 December 2019 (Audited)

		-	-	-
Short-term bank borrowings	205,738		205,738	200,000
Other current liabilities	21,131	-	-	-	21,131	20,250
Long-term bank borrowings	970,469	808,529	1,250,571	1,726,434	4,756,003	3,818,136
Long-term payables	32,058	33,037	106,222	274,126	445,443	290,891
Trade payables	231,293	-	-	-	231,293	231,293
Other payables	1,534,014	-	-	-	1,534,014	1,534,014
Debentures	78,780	775,128	1,175,827	-	2,029,735	1,797,389

	3,073,483		1,616,694	2,532,620	2,000,560	9,223,357	7,891,973

62 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

14 DEFERRED REVENUE

Deferred revenue represents the subsidies received from governmental authorities with respects to Group's certain construction and research and development projects. The details of deferred revenue are as below:

	Audited			Recognised	Unaudited
	31 December			in Other	30 June	Relating to
	2019		Additions	income-net	2020		assets/costs
	RMB' 000	RMB' 000	RMB' 000	RMB' 000
Sewage water processing plants:			-
- Jingu	1,207,260		(25,643)	1,181,617		assets
- Jingu upgrading project	156,480		-	(3,260)	153,220		assets
- Beichen upgrading project	86,400		-	(1,800)	84,600		assets
- Xianyanglu-upgrading project	56,716		-	(1,182)	55,534		assets
- Dongjiao-upgrading project	39,798	-	(829)	38,969	assets
- Ningxiang project	17,348	-	(465)	16,883	assets
- Beishiqiao-upgrading project	9,635	-	(358)	9,277	assets
- Linxia project	9,392	-	(165)	9,227	assets
- Chibi project	5,500	2,250	-	7,750	assets
Water recycling plants:			-	-
- Jingu	199,498	199,498	assets
- Dongjiao	20,406	-	(337)	20,069	assets
- Beichen	17,587	-	(262)	17,325	assets
- Xianyanglu	12,344	-	-	12,344	assets
Heating and cooling supply service project	210,269	6,207	-	216,476	assets
Others	11,069	920	(1,584)	10,405	costs

Total	2,059,702		9,377	(35,885)	2,033,194

15 DEFERRED INCOME TAX LIABILITIES

	Unaudited
	Half-year
	2020		2019
	RMB' 000	RMB' 000
Opening balance as at 1 January	125,587		138,812
Charged to profit or loss	238		2,558
Closing balance as at 30 June	125,825		141,370

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

16 PROVISIONS FOR OTHER LIABILITIES AND CHARGES

	Major overhauls
	for the assets of
	concession right
	Unaudited
	RMB' 000
Balance at 31 December 2019 (Audited) and 30 June 2020 (Unaudited)	24,235

Analysis of total provisions:

	Unaudited	Audited
	30 June	31 December
	2020	2019
	RMB' 000	RMB' 000
Non-current	11,665	11,665
Current	12,570	12,933

	24,235		24,598

17 TRADE PAYABLES, CONTRACT LIABILITIES, OTHER PAYABLES AND INCOME TAX AND OTHER TAXES PAYABLES

		Unaudited	Audited
		30 June	31 December
	Notes	2020	2019
		RMB' 000	RMB' 000
Trade payables	(a)	269,513	231,293
Contract liabilities	(b)	584,519	558,472
Other payables	(c)	1,271,208	1,532,842
Income tax and other taxes payables		44,889	86,188
		2,170,129		2,408,795

As at 30 June 2020, the majority of trade payables are aged within one year.

64 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

17 TRADE PAYABLES, CONTRACT LIABILITIES, OTHER PAYABLES AND INCOME TAX AND OTHER TAXES PAYABLES (Continued)

Contract liabilities

	Unaudited	Audited
	30 June	31 December
	2020		2019
	RMB' 000	RMB' 000
For recycled water and pipeline connection services	510,786	508,138
For toll road fee	42,880		-
For equipment sales	13,603		11,263
For heating and cooling supply service	2,688	8,014
For hazardous wastes	8,612	6,197
For sewage water services	-	12,071
Others	5,950	12,789

	584,519		558,472

(c)	Other payables comprise:
		Unaudited	Audited
		30 June	31 December
		2020		2019
		RMB' 000	RMB' 000
	Construction costs payable	1,040,725	1,224,453
	Interest payable for borrowings	25,279		42,974
	Payable for purchases of property, plant and equipment and concession right	13,892		171,392
	Others	191,312	94,023

		1,271,208		1,532,842

As at 30 June 2020, other payables of RMB656 million (31 December 2019: RMB663 million) were aged over one year, which mainly represented payables and deposits for sewage plants upgrading projects. The balances had yet to be settled as those projects and their final accounts have not been completed.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

18 COMMITMENTS AND CONTINGENT EVENT

The Group's commitments at the balance sheet date in respect of construction projects are as follows:

	Contracted but not provided for	Authorised but not contracted for
	Unaudited	Audited	Unaudited	Audited
	30 June	31 December	30 June	31 December
	2020		2019		2020		2019
	RMB' million	RMB' million	RMB' million	RMB' million
Property, plant and equipment	50		31		-	34
Intangible assets	1,144		1,414		1,346		1,088
	1,194		1,445		1,346		1,122

19 RELATED PARTY TRANSACTIONS

In addition to the related party information shown elsewhere in the financial statements, the following is a summary of significant related party transactions entered into in the ordinary course of the business between the Group and its related parties during the period.

(i)	Income:
			Unaudited
	Related parties	Nature of transaction	Half-year
			2020		2019
			RMB' 000	RMB' 000
	City Infrastructure Construction	Commission income from
	and Investment	contract operation	41,312		27,736
	Tianjin Lecheng Properties Limited	Income from heating and cooling supply	11,054		12,489
	City Infrastructure Construction	Commission income from			-
	and Investment	construction agent service	7,471
			59,837		40,225

Key management compensation for the half-year ended 30 June 2020 is summarized as follows:

	Unaudited
	Half -year
	2020		2019
	RMB' 000	RMB' 000
Key management compensation	8,452		7,308

66 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

19 RELATED PARTY TRANSACTIONS (Continued)

Receivables from to related parties:

	Unaudited	Audited
	30 June	31 December
	2020		2019
	RMB' 000	RMB' 000
- City Infrastructure Construction and Investment	46,849		60,423
- Tianjin Lecheng Properties Limited	16,699		4,650
- Tianjin City Resource Operation Co., Ltd.	401	401
	63,949		65,474

Transactions/balances with other state owned enterprises in the PRC
The Group operates in an economic environment currently predominated by enterprises directly or indirectly owned or controlled by the PRC government (hereinafter collectively referred to as 'state-owned enterprises').

During the half-year, the Group's significant transactions with these state controlled entities include processing of sewage water construction and management of related facility processing of tap water and supply of heating. As at 30 June 2020, majority of the Group's cash and cash equivalents and borrowings are dealt with state controlled banks.

20 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS

Financial instruments are carried at fair value as at 30 June 2020 by level of the inputs to valuation techniques used to measure fair value. Such inputs are categorised into three levels within a fair value hierarchy as follows:

Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted (unadjusted) market prices at the end of the reporting period. The quoted marked price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

I. Prepared in accordance with Hong Kong Financial Reporting Standards

Notes to the Condensed Consolidated Interim Financial Information

(All amounts in RMB thousand unless otherwise stated)

20 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (Continued)

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.

The Group also has a number of financial instruments which are not measured at fair value in the balance sheet. For all of these instruments, the fair value are not materially different from their carrying amounts, since the interest receivable/payable is either close to current market rates or the instruments are short term in nature.

21 BASIS OF PREPARATION OF HALFYEAR REPORT

This condensed consolidated interim financial report for the half-year reporting period ended 30 June 2020 has been prepared in accordance with Accounting Standard HKAS 34 Interim Financial Reporting.

The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the period ended 31 December 2019 and any public announcements made by the Group during the interim reporting period.

New and amended standards adopted by the group
A number of new or amended standards became applicable for the current reporting period. The group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.

68 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Consolidated and Company Balance Sheet

As at at 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

		Unaudited	Audited	Unaudited	Audited
		30 June	31 December	30 June	31 December
		2020		2019	2020		2019
ASSETS	Note	Consolidated	Consolidated	Company	Company
Current assets
Cash at bank and on hand	4(1)	1,801,237		2,079,613		501,522		741,257
Notes receivable	4(2)	9,087		16,131		-	-
Trade receivables	4(3)/14(1)	2,986,773		2,492,764		2,155,416		1,958,081
Advances to suppliers	4(4)	45,718		38,583		4,053		1,916
Other receivables	4(5)/14(2)	33,899		65,156		63,245		86,125
Inventories	4(6)	14,211		14,805		5,517		4,811
Current portion of non-current assets	4(8)	18,636		17,224		18,636		17,224
Other current assets	4(7)	98,415		72,504		333,737		478,566
Dividends receivable		-	-	1,820		1,820

Total current assets		5,007,976		4,796,780	3,083,946		3,289,800
Non-current assets
Long-term receivables	4(8)	226,428		236,450	226,428		236,450
Long-term equity investments	4(9)/14(3)	195,000		195,000		4,143,246		4,067,052
Other equity instruments investment	4(10)	2,000		2,000		2,000		2,000
Fixed assets	4(11)	620,172		641,793		151,577		160,912
Construction in progress	4(11)	200,483		159,214		955		699
Intangible assets	4(12)	11,830,208		11,759,442		3,934,873		4,021,934
Deferred income tax assets	4(19)	4,209		4,209		-	-
Other non-current assets	4(7)	236,230		195,919		202,832		115,332

Total non-current assets		13,314,730		13,194,027	8,661,911		8,604,379

TOTAL ASSETS		18,322,706		17,990,807	11,745,857	11,894,179

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Consolidated and Company Balance Sheet

As at at 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

		Unaudited	Audited	Unaudited	Audited
		30 June	31 December	30 June	31 December
LIABILITIES AND OWNERS' EQUITY	Note	2020		2019		2020		2019
	Consolidated	Consolidated	Company	Company
Current liabilities		-			-
Short-term borrowings	4(16)	200,000		200,000
Trade payables	4(14)	269,513		231,293		72,885		65,904
Contract liabilities	4(14)	584,519		558,472		47,830		4,950
Taxes payable	4(14)	44,889		86,188		6,289		31,101
Other payables	4(14)	1,422,084		1,534,014		521,769		417,707
Accrued payroll	4(15)	23,797		66,100		13,891		30,463
Current portion of non-current liabilities	4(16)	537,684		852,552		253,047		582,872
Other current liabilities	4(16)	-	20,250		-	-

Total current liabilities		2,882,486		3,548,869		915,711		1,332,997
Non-current liabilities
Long-term borrowings	4(16)	3,906,259	3,006,756	1,349,194	1,135,632
Debentures payable	4(16)	1,797,901		1,797,389		1,797,901		1,797,389
Long-term payables	4(16)	254,955		262,652		254,955		262,652
Provisions	4(17)	11,665		11,665		11,665		11,665
Deferred income	4(18)	2,033,194		2,059,702		1,559,662		1,593,830
Deferred tax liabilities	4(19)	125,825		125,587		61,822		60,642
Other non-current liabilities	4(16)	36,000		36,000		670,000		670,000
Total non-current liabilities		8,165,799		7,299,751		5,705,199		5,531,810

Total liabilities		11,048,285		10,848,620	6,620,910	6,864,807
Shareholder's equity

Share capital	4(20)	1,427,228		1,427,228		1,427,228		1,427,228
Capital surplus	4(21)(a)	431,024		431,024		380,788		380,788
Surplus reserve	4(21)(b)	558,250		558,250		558,250		558,250
Undistributed profits	4(21)(c)	3,861,758		3,757,523		2,758,681		2,663,106

Total equity attributable to equity owners of the parent		6,278,260		6,174,025		5,124,947		5,029,372
Minority interests		996,161		968,162		-	-
Total owners' equity
	7,274,421		7,142,187		5,124,947		5,029,372
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY
	18,322,706		17,990,807	11,745,857	11,894,179

The accompanying notes form an integral part of these financial statements.

	Person in charge of	Person in charge of
Company representative:	accounting function:	accounting department:
Liu Yujun	Peng Yilin	Liu Tao

70 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Consolidated and Company Income Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

		Unaudited	Unaudited	Unaudited	Unaudited
		Six Months	Six Months	Six Months	Six Months
		Ended	Ended	Ended	Ended
Item	Note	30 June 2020	30 June 2019	30 June 2020	30 June 2019
		Consolidated	Consolidated	Company	Company
1. Revenue	4(22)/14(4)	1,521,390			1,224,716		707,200		537,958
Less: Cost of sales	4(22)/14(4)	(1,040,712)	(814,360)	(430,781)	(349,007)
Taxes and surcharges	4(23)	(22,178)	(18,907)	(10,174)	(5,697)
Selling and distribution expenses	4(24)	(7,922)	(1,987)	-	-
General and administrative expenses	4(24)	(70,253)	(68,032)	(39,146)	(38,019)
Research and development expenses	4(25)	(2,517)	(3,270)	-	-
Financial expenses-net	4(26)	(112,987)	(93,123)	(98,767)	(74,797)
Including: interest expense		(126,582)	(106,590)	(106,711)	(82,147)
interest income		12,328			10,980		6,606		6,085
Add: Other income	4(27)	73,977			60,744		63,054		34,098
Investment gains	4(28)/14(5)	-	-	89,219		19,301
Including: Share of profit of associates		-	-	-	-
Credit impairment losses	4(29)	-	98		-	-
Gains/(Losses) on disposals of assets	4(30)	-	1,201		-	-

2. Operating profit		338,798			287,080		280,605		123,837
Add: Non-operating income	4(31)	232			2,549		115		1,092
Less: Non-operating expenses	4(32)	(2,817)	(2,380)	(2,198)	(2,379)

3. Total profit		336,213			287,249		278,522		122,550
Less: Income tax expenses	4(33)	(59,172)	(56,154)	(30,234)	(18,382)
4. Net profit		277,041			231,095		248,288		104,168
Classified by continuity of operations
Net profit from continuing operations		277,041			231,095		248,288		104,168
Net profit from discontinued operations		-	-	-	-
Classified by ownership of the equity							--	--
Minority interests		20,093			12,592
Attributable to equity owners of the Company		256,948			218,503		248,288		104,168
5. Other comprehensive income after deduction

of impact of income tax
6. Total comprehensive income		277,041			231,095		248,288		104,168
Attributable to equity owners of the Company		256,948	218,503	248,288		104,168
Attributable to minority shareholders		20,093			12,592		--	--
Earnings per share (in RMB Yuan)
						-	-
Basic	4(34)	0.18	0.15
Diluted	4(34)	0.18			0.15		-	-

The accompanying notes form an integral part of these financial statements.

	Person in charge of	Person in charge of
Company representative:	accounting function:	accounting department:
Liu Yujun	Peng Yilin	Liu Tao

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Consolidated and Company Cash Flow Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

		Unaudited	Unaudited	Unaudited	Unaudited
		Six Months	Six Months	Six Months	Six Months
		Ended	Ended	Ended	Ended
Item	Note	30 June 2020	30 June 2019	30 June 2020	30 June 2019
		Consolidated	Consolidated	Company	Company
1. Cash flows from operating activities
Cash received from sales of goods or rendering of services		1,236,854		1,487,655		653,596	851,851
Refund of taxes and surcharges		56,759		17,864		40,530		5,604
Cash received relating to other operating activities	4(35)(c)	82,421		173,011		466,144		23,558
Sub-total of cash inflows		1,376,034		1,678,530	1,160,270	881,013

Cash paid for goods and services		(620,274)	(534,015)	(334,466)	(272,236)
Cash paid to and on behalf of employees		(198,722)	(180,613)	(84,626)	(73,804)
Payments of taxes and surcharges		(226,454)	(161,893)	(131,553)	(45,583)
Cash paid relating to other operating activities	4(35)(d)	(69,285)	(72,302)	(376,847)	(41,789)

Sub-total of cash outflows		(1,114,735)	(948,823)	(927,492)	(433,412)

Net cash flows from operating activities	4(35)(a)	261,299		729,707	232,778	447,601
2. Cash flows from investing activities

	-	-			-
Cash received from returns on investments		76,960
Net cash received from disposal of fixed assets	4(35)(e)	49		30	-	-
Cash received relating to other investing activities		3,900		5,174	-	756,820

Sub-total of cash inflows		3,949		5,204	76,960	756,820
Cash paid to acquire fixed assets, intangible assets and
other long-term assets		(767,970)	(1,280,910)	(66,188)	(150,369)
Cash paid to acquire investments		-	-	(76,193)	(343,455)
Cash paid relating to other investing activities		-	(3,900)	-	(499,470)

Sub-total of cash outflows		(767,970)	(1,284,810)	(142,381)	(993,294)

Net cash flows from investing activities		(764,021)	(1,279,606)	(65,421)	(236,474)

72 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Consolidated and Company Cash Flow Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

		Unaudited	Unaudited	Unaudited	Unaudited
		Six Months	Six Months	Six Months	Six Months
		Ended	Ended	Ended	Ended
Item	Note	30 June 2020	30 June 2019	30 June 2020	30 June 2019
		Consolidated	Consolidated	Company	Company
3. Cash flows from financing activities
Cash received from borrowings		1,597,564		1,244,516	755,140		474,069
Cash received from capital contributions		12,706			129,224		-	-
Including: Cash received from capital contributions							-		-
by minority shareholders of subsidiaries		12,706			129,224
Sub-total of cash inflows		1,610,270		1,373,740	755,140		474,069

Cash repayments of borrowings		(1,241,626)	(496,037)	(1,070,500)	(400,000)
Cash payments for distribution of interest expenses		(132,590)	(111,076)	(89,115)	(91,458)
Payments for distribution of dividends or profits		(7,809)	(978)	(2,617)	-
Including: Dividends and profits paid to minority					-	-	-
shareholders by subsidiaries		(5,192)

Sub-total of cash outflows		(1,382,025)	(608,091)	(1,162,232)	(491,458)

Net cash flows from financing activities		228,245		765,649	(407,092)	(17,389)


4. Effect of foreign exchange rate changes on cash		-	-	-	-

5. Net increase/(decrease) in cash		(274,477)	215,750	(239,735)	193,738
Add: Cash at beginning of year		2,066,301		1,808,543	736,182		586,888

6. Cash at end of year	4(35)(b)	1,791,824		2,024,293	496,447		780,626

The accompanying notes form an integral part of these financial statements.

	Person in charge of	Person in charge of
Company representative:	accounting function:	accounting department:
Liu Yujun	Peng Yilin	Liu Tao

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Consolidated Statement of Changes in Owners' Equity

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

			Attributable to owners of the parent				Total


		Share		Capital	Surplus	Undistributed	Minority	shareholders'
Item	Note	capital		surplus	reserve	profits	interests	equity
Balance at 1 January 2019 (Audited)		1,427,228	431,024	517,107	3,442,844	796,764	6,614,967
Movements for the period ended 30 June 2019

Total comprehensive income		-		-	-
Net profit			218,503	12,592	231,095

Total comprehensive income for the year		-		-		-		218,503	12,592	231,095
Capital contribution by shareholders		-		-	-	-	129,224	129,224
Profit distribution		-		-	-
Dividend distribution to shareholders	4(21)(c)		(151,286)	(391)	(151,677)

Balance at 30 June 2019 (Unaudited)		1,427,228		431,024	517,107	3,510,061	938,189	6,823,609


Balance at 1 January 2020 (Audited)		1,427,228	431,024	558,250	3,757,523	968,162	7,142,187
Movements for the period ended 30 June 2020
Total comprehensive income		-		-	-
Net profit			256,948	20,093	277,041

Total comprehensive income for the year		-		-	-	256,948	20,093	277,041

Capital contribution by shareholders		-		-	-	-	12,706	12,706
Profit distribution		-		-	-
Dividend distribution to shareholders	4(21)(c)		(152,713)	(4,800)	(157,513)

Balance at 30 June 2020 (Unaudited)		1,427,228		431,024				558,250		3,861,758	996,161	7,274,421

The accompanying notes form an integral part of these financial statements.

	Person in charge of	Person in charge of
Company representative:	accounting function:	accounting department:
Liu Yujun	Peng Yilin	Liu Tao

74 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Company Statement of Changes in Owners' Equity

Of the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

									Total
			Capital	Surplus	Undistributed	shareholders'
Item	Share capital		surplus	reserve	profits	equity
Balance at 1 January 2019 (Audited)	1,427,228	380,788		517,107		2,444,111		4,769,234
Movements for the period ended 30 June 2019

Total comprehensive income	-		-	-
Net profit		104,168		104,168

Total comprehensive income for the year	-		-	-	104,168		104,168
Profit distribution	-		-	-
Dividend distribution to shareholders		(151,286)	(151,286)

Balance at 30 June 2019 (Unaudited)	1,427,228	380,788	517,107	2,396,993		4,722,116


Balance at 1 January 2020 (Audited)	1,427,228	380,788	558,250	2,663,106		5,029,372
Movements for the period ended 30 June 2020

Total comprehensive income	-		-	-
Net profit		248,288		248,288

Total comprehensive income for the year	-		-	-	248,288		248,288
Profit distribution	-		-	-
Dividend distribution to shareholders		(152,713)	(152,713)

Balance at 30 June 2020 (Unaudited)	1,427,228		380,788	558,250	2,758,681		5,124,947

The accompanying notes form an integral part of these financial statements.

	Person in charge of	Person in charge of
Company representative:	accounting function:	accounting department:
Liu Yujun	Peng Yilin	Liu Tao

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

1 GENERAL INFORMATION

Tianjin Capital Environmental Protection Group Company Limited (the "Company") was established on the basis of Tianjin Bohai chemical industry (Group) Company Limited ("Bohai Chemical Industry"). Bohai Chemical Industry was established on 8 June 1993 in Tianjin, the People's Republic of China (the 'PRC'), listed in Hong Kong Stock Exchange ("H share") in May 1994 and Shanghai Stock Exchange ("A share") in June 1995. Bohai Chemical Industry appeared significant losses in 1998 and 1999. Approved by Tianjin Government, the Company had completed the equity and assets reorganization of Bohai Chemical Industry at the end of year 2000. The address of the Company's registered office is No.45 Guizhou Road, Heping District, Tianjin. The parent company and ultimate holding company of the Company are Tianjin Municipal Investment Company Limited ("Municipal Investment") and Tianjin City Infrastructure Construction and Investment Group Company Limited ("City Infrastructure Construction and Investment"), respectively. As at 30 June 2020, the Company's total share capital is RMB1,427 million with a par value of RMB1 per share.

The principal activities of the Company and its subsidiaries (the "Group") include processing of sewage water, supply of tap water and recycled water, supply of heating and cooling, hazardous waste treatment and construction and management of related facilities as described below:

Processing of sewage water

Pursuant to relevant agreements ("Service concession right agreements"), the Group currently provides sewage water processing services via the following plants:

Location	Agreement date	Authorized by
Guiyang, Guizhou	16 September 2004	Guiyang City Administration Bureau
Baoying, Jiangsu	13 June 2005	Baoying Construction Bureau
Chibi, Hubei	15 July 2005	Chibi Construction Bureau
Fuyang, Anhui	18 December 2005	Fuyang Construction Committee
Qujing, Yunnan	25 December 2005	Qujing Construction Bureau (Renamed Qujing Housing and
		Urban Construction Bureau)
Honghu, Hubei	29 December 2005	Honghu Construction Bureau
Hangzhou, Zhejiang	20 November 2006	Hangzhou Sewage Company (Changed to Hangzhou Municipal Facilities
		Supervision Center)
Jinghai, Tianjin	12 September 2007	Tianjin Tianyu Science Technology Park
Wendeng, Shandong	19 December 2007	Wendeng Construction Bureau
Xi'an, Shaanxi	18 March 2008	Xi'an Infrastructure Investment Group
Anguo, Hebei	14 October 2008	Anguo Municipal Government
Xianning, Hubei	16 October 2008	Xianning Construction Committee
Yingdong, Anhui	10 August 2009	Fuyang Yingdong Construction Bureau
Qujing, Yunnan	16 August 2011	QuJing Housing and Urban Construction Bureau
Chaohu, Anhui	25 August 2011	Hanshan Housing and Urban Construction Bureau
Jingu, Tianjin	18 February 2014	Tianjin Urban-rural Construction Commission ("TUCC") and
		Tianjin Water Authority Bureau("TWAB")
Xianyanglu, Tianjin	18 February 2014	TUCC and TWAB

76 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

1 GENERAL INFORMATION (Continued)

Processing of sewage water (Continued)

Location	Agreement date	Authorized by
Dongjiao, Tianjin	18 February 2014	TUCC and TWAB
Beicang, Tianjin	18 February 2014	TUCC and TWAB
Yingshang, Anhui	16	June 2016	Yingshang Housing and Urban-rural Construction Bureau
Karamay, Xinjiang	4 November 2016	Karamay Construction Bureau
Linxia, Gansu	13 May 2017	Linxia Housing and Urban-rural Construction Bureau
Ningxiang, Changsha	5	June 2017	Ningxiang Economic and Technological Development
			Zone Management Committee
Hefei, Anhui	16	June 2017	Hefei Urban Construction Committee
Dalian, Liaoning	1 November 2017	Dalian Urban Construction Bureau
Bayannur, Inner Mongolia	12 December 2017	Bayannur Water Bureau and
			Bayannur Hetao Water Group Company, Ltd
Ningxiang, Changsha	27 April 2018	Ningxiang Economic and Technological Development
			Zone Management Committee
Honghu, Hubei	9	June 2018	Honghu Housing and Urban-rural Construction Bureau
Shibing, Guizhou	12 July 2018	Shibing Water Bureau
Hefei, Anhui	28 November 2018	Hefei Urban Construction Committee
Deqing, Zhejiang	1 January 2019	Deqing Qianyuan Municipal Government
Gaocheng, Hebei	2 April 2019	Hebei Gaocheng Economic and Technological Development
			Zone Management Committee
Jiuquan, Gansu	22	June 2019	Jiuquan Suzhou Municipal Government
Yingdong, Anhui	26 August 2019	Fuyang Urban-rural Construction Commission
Huoqiu, Anhui	2 January 2020	Huoqiu Housing and Urban-rural Construction Bureau
Huize, Yunnan	24 February 2020	Huize Housing and Urban-rural Construction Bureau

The Group provides sewage treatment services in accordance with the Concession Agreements and is entitled to charge for the service based on a pre-determined rate.

Supply of tap water
Pursuant to relevant agreements, the Group provides tap water supply service initially at the pre-determined rate and the price as pre-determined may be revised subsequently taking into account various cost factors.
Recycled water business
The Group's recycled water business includes developing, constructing and operating of recycled water projects, production and sale of recycled water, and provision of related research and development and technical consultation services.
Heating and cooling supply services
The heating and cooling supply services include design, construction, operations and transfer of centralized heating and cooling infrastructures, and provision of heating and cooling services.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

GENERAL INFORMATION (Continued)
1. Hazardous waste treatment
  Hazardous treatment include hazardous and solid waste treatment. Currently, the Group conducts the disposal by way of incineration, landfill, physicochemical and curing treatment. Adoption of treatment method tailored to the local help to realize the aim of harmless, resource and reduction.
2. Subsidiaries included in the scope of consolidation for the year and newly consolidated subsidiaries are set out in Note 5 and Note 6.
3. These financial statements were approved by the Company's Board of Directors on 26 August 2020.
SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

The Group determines the specific accounting policies and accounting estimates according to the production management characteristics, which are mainly reflected in the measurement of expected credit losses of receivables and contract assets (Note 2(8)), depreciation and amortization of fixed assets and intangible assets (Note 2(11) and (14)), recognition and amortization of concession rights (Note 2(14) (b)), timing of revenue recognition (Note 2(20)) and so on.

Key assumption adopted by the Group in determining significant accounting policies are set out in Note 2(25).

Basis of preparation
The financial statements are prepared in accordance with the Accounting Standard for Business Enterprises - Basic Standard , and the specific accounting standards and other relevant regulations issued by the Ministry of Finance on 15 February 2006 and in subsequent periods (hereafter collectively referred to as "the Accounting Standards for Business Enterprises" or "CAS") and Circular of the China Securities Regulatory Commission on the Issuing of the Rules for the Information Disclosure and Compilation of Companies Publicly Issuing Securities No. 15 - General Provisions on Financial Statements .
The financial statements are prepared on a going concern basis.
Statement of compliance with Accounting Standard for Business Enterprise
The financial statements of the Company for the six months ended 30 June 2020 are in compliance with the Accounting Standard for Business Enterprise and truly and completely present the consolidated and the Company's financial position of the Company as of 30 June 2020 and of their financial performance, cash flows and other information for the year then ended.

78 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Accounting year
The Company's accounting year starts on 1 January and ends on 31 December. This financial statement is dated from 1 January 2020 to 30 June 2020.
Recording currency
The Company's recording currency is Renminbi (RMB). The recording currency of the Company's subsidiaries is determined based on the primary economic environment in which they operate, and except the recording currency of Tianjin Capital Environmental Protection (Hong Kong) Co., Ltd. which is HK dollar, the remaining subsidiary companies' recording currency is RMB. The financial statements are presented in RMB.
Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases.
In preparing the consolidated financial statements, the financial statements of subsidiaries are adjusted in accordance with the accounting policies and accounting period of the Company during the preparation of the consolidated financial statements, where the accounting policies and the accounting periods are inconsistent between the Company and subsidiaries. For subsidiaries acquired from business combinations not under common control, the financial statements are adjusted based on the fair value of the identifiable net assets at the acquisition date.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Preparation of consolidated financial statements (Continued)
All significant intra-group balances, transactions and unrealized profits are eliminated in the consolidated financial statements. The portion of subsidiaries' equity and the portion of a subsidiaries' net profits and losses and comprehensive incomes for the period not attributable to Company are recognised as minority interests and presented separately in the consolidated financial statements under equity, net profits and total comprehensive income respectively. Unrealized profits and losses resulting from the sale of assets by the Company to its subsidiaries are fully eliminated against net profit attributable to owners of the parent. Unrealized profits and losses resulting from the sale of assets by a subsidiary to the Company are eliminated and allocated between net profit attributable to owners of the parent and minority interests in accordance with the allocation proportion of the parent in the subsidiary. Unrealized profits and losses resulting from the sale of assets by one subsidiary to another are eliminated and allocated between net profit attributable to owners of the parent and minority interests in accordance with the allocation proportion of the parent in the subsidiary. Unrealized profits and losses resulting from the sale of assets by one subsidiary to another are eliminated and allocated between net profit attributable to owners of the parent and minority interests in accordance with the allocation proportion of the parent in the subsidiary.
If the accounting treatment of a transaction which considers the Group as an accounting entity is different from that considers the Company or its subsidiaries as an accounting entity, it is adjusted from the perspective of the Group.
Cash
Cash comprise cash on hand and deposits that can be readily drawn on demand.

80 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Foreign currency translation
1. Foreign currency transactions
  Foreign currency transactions are translated into recording currency using the exchange rates prevailing at the dates of the transactions.
  At the balance sheet date, monetary items denominated in foreign currencies are translated into recording currency using the spot exchange rates on the balance sheet date. Exchange differences arising from these translations are recognised in profit or loss for the current year, except for those attributable to foreign currency borrowings that have been taken out specifically for the acquisition or construction of qualifying assets, which are capitalized as part of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
2. Translation of foreign currency financial statements
  The asset and liability items in the balance sheets for overseas operations are translated at the spot exchange rates on the balance sheet date. Among the shareholders' equity items, the items other than "undistributed profits" are translated at the spot exchange rates of the transaction dates. The income and expense items in the income statements of overseas operations are translated at the spot exchange rates of the transaction dates. The differences arising from the above translation are presented in other comprehensive income. The cash flows of overseas operations are translated at the spot exchange rates on the dates of the cash flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Financial instruments
Financial instruments refer to the contracts that form one party's financial assets and form other parties' financial liabilities or equity instruments. The Group recognise financial assets or financial liabilities when become one party of the financial instruments contracts.
1. Financial assets
2. 1. Classification and measurement
    Based on the business model for financial asset management and the contractual cash flow characteristics of financial assets, the Group classifies the financial assets into: (1) financial assets measured at amortised cost; (2) financial assets measured at fair value and through other comprehensive income; (3) financial assets measured at fair value and through profit or loss.
    Financial assets are initially recognised at fair value. For financial assets at fair value through profit and loss, the related transaction costs are directly recognised in profit or loss. For other financial assets, the related transaction costs are included in initially recognised amounts. Notes or trade receivables arising from sales of products or rendering of services (excluding or without regard to significant financing components) are initially recognised at the consideration that is entitled to be charged by the Group as expected.
    Debt instruments
    Debt instruments held by the Group are those meet the definition of a financial liability from the issuer's perspective and are measured at the following methods:

82 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Financial instruments (Continued)
1. Financial assets (Continued)
2. 1. Classification and measurement (Continued)
    Measured at amortised cost:
    The Group's business model for financial asset management aims to receive contractual cash flows. The contractual cash flow characteristics of such financial assets are consistent with basic loan arrangement, which means the cash flow generated at certain date is only the payment for the principal and the corresponding interest based on unpaid principal. The interest income of such financial assets is recognised using the effective interest method. The Group's financial assets mainly include cash at bank and on hand, Notes receivable, trade receivables, other receivables, and long-term receivables long-term receivables with maturities no more than one year (inclusive) at the balance sheet date are included in the current portion of non-current assets.
    Equity instruments
    The Group designates non-traded investments in equity instrument as financial assets at FVOCI, and present as other investments in equity instrument. Relevant dividend income of these financial assets are recognised in profit or loss.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Financial instruments (Continued)
1. Financial assets (Continued)
2. 1. Impairment of financial assets
    The Group recognises the loss provision based on expected credit losses ("ECL") for financial assets and contract assets measured at amortised cost.
    The Group calculates the probability weighted amount of the present value of differences between the cash flows receivable by the contract and the cash flows expected to be received, and recognises the ECL by considering the reasonable and well-founded information on past events, current conditions and forecasts of future economic conditions, taking the risk of default as a weight.
    As at each balance sheet date, the Group measures the ECL of financial instruments at different stages respectively. Financial instrument that had no significant increase in credit risk since initial recognition belongs to "Stage 1", and the Group makes loss provision based on the ECL in the following 12 months. Financial instrument that had a significant increase but with no credit impairment since initial recognition belongs to "Stage 2", and the Group makes the loss provision based on the lifetime ECL. Financial instrument that suffered credit impairment since initial recognition belongs to "Stage 3", and the Group makes the loss provision based on the lifetime ECL.
    For the financial instrument with lower credit risk on the balance sheet date, the Group assumes that its credit risk had no significant increase since initial recognition, and makes the loss provision based on the ECL in the following 12 months.
    For financial instruments belonging to "Stage 1", "Stage 2" and those with lower credit risk, the interest income is calculated based on its carrying amount (including impairment provision) and effective interest rate. For the financial instrument belonging to "Stage 3", the interest income is calculated based on the amortised cost (which is made after carrying amount less the impairment provision) and effective interest rate.

84 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Financial instruments (Continued)
1. Financial assets (Continued)
2. 1. Impairment of financial assets (Continued)
    For notes receivable, trade receivables and contract assets, regardless of existence of the significant financing component, the Group makes the loss provision according to the lifetime ECL. For lease receivables, the Group makes the loss provision according to the lifetime ECL as well.
    When the expected credit loss cannot be assessed at a reasonable cost for an individual financial asset, the Group divides receivables into certain groupings based on credit risk characteristics, then pursuant to which, calculates the ECL. Basis for grouping is as follows:

Banker's acceptance notes group	Banker's acceptance from bank under low risk
Government clients group	Government clients except those in provincial capitals and municipalities
Other clients group	Other clients
Project deposit group	Project deposits
Others group	Other receivables excluding VAT refund and project deposits

For trade receivables, lease receivables that are classified into above groupings and notes receivables arising from sale of goods or rendering of services,, the Group calculates ECL using exposure at default ("EAD") and lifetime ECL rate with reference to historical credit loss experience, in combination with the current situation and forecasts of future economic conditions. Other types of notes receivables and other receivables that are classified into above groupings, the Group calculates ECL using EAD and lifetime ECL rate or ECL rate in the following 12 months with reference to historical loss experience, in combination with the current situation and forecasts of future economic conditions.

The Group included the provision for or reversal of loss provision into profit or loss.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Financial instruments (Continued)
1. Financial assets (Continued)
2. 1. Derecognition of financial assets
    A financial asset is derecognised when any of the below criteria is met: (1) the contractual rights to receive the cash flows from the financial asset expire; (2) the financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee; (3) the financial asset has been transferred and the Group has not retained control of the financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset.
    On derecognition of other investments in equity instrument, the difference between the carrying amount and the sum of the consideration received and the cumulative changes in fair value that had been recognised directly in other comprehensive income, is recognised in retained earnings; on derecognition of other financial assets, the difference between the carrying amount and the sum of the consideration received and the cumulative changes in fair value that had been recognised directly in other comprehensive income, is recognised in profit or loss.
3. Financial liabilities
  Financial liabilities are classified into the following categories at initial recognition: financial liabilities measured at amortised cost and financial liabilities at fair value through profit or loss.
  The Group's financial liabilities mainly refer to financial liabilities measured at amortised cost, including trade payables, other payables, borrowings and debentures payable. Such financial liabilities are initially recognised at fair value, net of transaction costs incurred, and subsequently measured using effective interest method. Financial liabilities of which the period is within one year (inclusive) are classified as the current liabilities; the period is over one year while will be due within one year (inclusive) since the balance sheet date are classified as current portion of non-current liabilities; and the others are classified as non-current liabilities.
  A financial liability is derecognised when all or part of the obligation is extinguished. The difference between the carrying amount of a financial liability extinguished and the consideration paid, shall be recognised in profit or loss.

86 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Financial instruments (Continued)
1. Determination of fair value of financial instruments
  The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique. In valuation, the Group adopts valuation techniques applicable in the current situation and supported by adequate available data and other information, selects inputs with the same characteristics as those of assets or liabilities considered in relevant transactions of assets or liabilities by market participants, and gives priority to the use of relevant observable inputs. When relevant observable inputs are not available or feasible, unobservable inputs are adopted.
Inventories
1. Classification
  Inventories include raw materials, finished goods, spare parts and low cost consumables, and are measured at the lower of cost and net realizable value.
2. Costing of inventories
  Costs for raw materials, finished goods and low cost consumables are determined using the weighted average method. The cost of finished goods comprises raw materials, direct labor and systematically allocated production overhead based on the normal production capacity.
3. Basis for determining net realizable values of inventories and method for making provision for decline in the value of inventories
  Provision for decline in the value of inventories is determined at the excess amount of the carrying amounts of the inventories over their net realizable value. Net realizable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes.
4. The Group adopts the perpetual inventory system.
5. Spare parts and low cost consumables are expensed when used.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Long-termequity investments
Long-term equity investments comprise the Company's long-term equity investments in its subsidiaries, and the Group's long-term equity investments in its joint ventures and associates.
Subsidiaries are the investees over which the Company is able to exercise control. Associate are the investee over which the Group has significant influence on their financial and operating policy decisions.
Investments in subsidiaries are presented in the Company's financial statements using the cost method, and are adjusted to the equity method when preparing the consolidated financial statements. Investments in joint ventures and associates are accounted for using the equity method.
1. Determination of investment cost
  For long-term equity investment acquired from business combinations not under common control, the cost of the combination is the investment cost of the long-term equity investment.
  For long-term equity investment acquired by payment in cash, the initial investment cost shall be the purchase price actually paid.
2. Subsequent measurement and recognition of related profit and loss
  Long-term equity investments accounted for using the cost method, are measured at the initial investment costs. Cash dividends or profit distribution declared by the investees are recognised as investment income in profit or loss.
  Long-term equity investments accounted for using the equity method, where the initial investment cost exceeds the Group's share of the fair value of the investee's identifiable net assets at the time of acquisition, the investment is initially measured at cost; where the initial investment cost is less than the Group's share of the fair value of the investee's identifiable net assets at the time of acquisition, the difference is included in profit or loss for the current year and the cost of the long-term equity investment is adjusted upwards accordingly.

88 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Long-termequity investments (Continued)
1. Subsequent measurement and recognition of related profit and loss (Continued)
  Under the equity method of accounting, the Group recognises the investment income according to its share of net profit or loss of the investee. The Group does not recognise further losses when the carrying amounts of the long-term equity investment together with any long-term interests that, in substance, form part of the Group's net investment in investees are reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the Group continues recognising the investment losses and the provisions at the amount it expects to undertake. The Group's share of the changes in investee's owner's equity other than those arising from the net profit or loss, other comprehensive income and profit distribution is recognised in capital surplus with a corresponding adjustment to the carrying amounts of the long-term equity investment. The carrying amount of the investment is reduced by the Group's share of the profit distribution or cash dividends declared by the investees. Unrealised gains or losses on transactions between the Group and its investees are eliminated to the extent of the Group's equity interest in the investees, based on which the investment income or losses are recognised. Any losses resulting from transactions between the Group and its investees, which are attributable to asset impairment losses are not eliminated.
2. Basis for determination of control, joint control and significant influence over investees
  Control is the right over the investee that entitles enjoy variable returns from their involvement in the investee and the ability to exert the right to affect those returns.
  Joint control is agreed sharing of control over an arrangement, and a decision relating to any activity under the arrangement can be made only when the parties sharing the control reach the unanimous agreement.
  Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
3. Impairment of long-term equity investments
  The carrying amounts of long-term equity investments in subsidiaries, joint ventures and associates are reduced to the recoverable amounts when the recoverable amounts are below their carrying amounts (Note 2(16)).

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Fixed assets
1. Recognition and initial measurement of fixed assets
  Fixed assets comprise buildings and structures, machinery and equipment, motor vehicles and others.
  Fixed assets are recognised when it is probable that the related economic benefits will flow to the Group and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the acquisition date.
  Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognised. All the other subsequent expenditures are recognised in profit or loss in the year in which they are incurred.
2. Depreciation methods of fixed assets
  Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives.
  The estimated useful lives, the estimated net residual values expressed as a percentage of cost and the annual depreciation rates of fixed assets are as follows:

	Estimated	Estimated net	Annual
	useful lives	residual values	depreciation rates
Buildings and structures	10-50 years	0%-5%	1.9%-10%
Machinery and equipment	10-20 years	0%-5%	4.8%-10%
Motor vehicles and others	5-10 years	0%-5%	9.5%-20%

Plants and pipelines network are included in buildings with estimated useful lives of 25 years.

The estimated useful life and the estimated net residual value of a fixed asset and the depreciation method applied to the asset are reviewed, and adjusted as appropriate at each year-end.

90 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Fixed assets (Continued)
1. The carrying amount of a fixed asset is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(16)).
2. Disposal of fixed assets
  A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is recognised in profit or loss for the current year.
Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, borrowing costs that are eligible for capitalisation and other costs necessary to bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins from the following month. The carrying amount of construction in progress is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(16)).
Borrowing costs
The borrowing costs that are directly attributable to the acquisition and construction of an asset that needs a substantially long period of time for its intended use commence to be capitalized and recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to prepare the asset for its intended use have commenced. The capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognised in profit or loss for the current year. Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Borrowing costs (Continued)
For the specific borrowings obtained for the acquisition or construction of an asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by deducting any interest income earned from depositing the unused specific borrowings in the banks or any investment income arising on the temporary investment of those borrowings during the capitalisation period.
For the general borrowings obtained for the acquisition or construction of an asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by applying the weighted average effective interest rate of general borrowings, to the weighted average of the excess amount of cumulative expenditures on the asset over the amount of specific borrowings. The effective interest rate is the rate at which the estimated future cash flows during the period of expected duration of the borrowings or applicable shorter period are discounted to the initial amount of the borrowings.
Intangible assets
Intangible assets include land use rights, concession rights, technical know-how and software, and are measured at cost.
1. Land use rights
  Land use rights are amortized on the straight-line basis over their approved use period of 25-50 years. If the acquisition costs of the land use rights and the buildings and structures located thereon cannot be reasonably allocated between the land use rights and the buildings, all of the acquisition costs are recognised as fixed assets.

92 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Intangible assets (Continued)
1. Concession rights
  As described in Note 1(a) and (d), the Group cooperates with government or its subsidiaries in the development, financing, operation and maintenance of facilities for public services (concession services) over a specified period of time (concession service period). The Group has access to operating the facilities and providing concession services in accordance with the terms specified in the arrangement, and transfers the facilities to the government at the end of the concession service period.
  The Service concession right agreement sets out performance standards and price adjustment mechanism to clarify the scope of concession services of the Group. The concession service arrangement is within the scope of Interpretations of Accounting Standards for Business Enterprises No.2 , such assets under the concession arrangement can be recognised as intangible assets or financial assets. The operator shall recognise an intangible asset to the extent that it receives a right (concession) to charge users of the public service and shall recognise a financial asset to the extent that it receives unconditional payments or guarantee for minimum charge from the approving authority. Rights in relation to concession services are recognised as intangible assets- concession rights by the Group, which are amortized on a straight-line basis over the terms of operation ranging from 20 to 30 years.
2. Technical know-how and software
  Separately acquired technical know-how and software are shown at historical cost. Technical know-how and software has a finite useful life and is carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost of technical know-how and software over their useful lives.
3. Periodical review of useful life and amortisation method
  For an intangible asset with a finite useful life, review of its useful life and amortisation method is performed at each year-end, with adjustment made as appropriate.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Intangible assets (Continued)
1. Research and development
  Expenditures for internal research and development projects are classified into research phase expenditures and development phase expenditures according to their nature and whether the intangible assets ultimately formed by research and development activities have greater uncertainty.
  Expenditures for the planned investigation, evaluation and selection phases for the study of the production process are expenditures for the research phase, which are included in the current profit and loss when incurred; prior to mass production, expenditure in the relevant design and testing phases for the final application of the environmental protection equipment production process is capitalized during the development phase, while meeting the following conditions:
2. - The development of the environmental protection equipment production has been fully demonstrated by the technical team;
  - Management has approved the budget for environmental protection equipment production development;
  - Research and analysis of previous market research indicates that the products produced by the environmental protection equipment production have marketing capabilities;
  - Adequate technical and financial support for the development of the environmental protection equipment production and subsequent mass production; and
  - Expenditure on environmental protection equipment production development can be reliably collected.

Expenditure in the development phase that does not meet the above conditions is recognised in profit or loss in the period in which it is incurred. Development expenditures that have been charged to profit or loss in the previous period are not reconfirmed as assets in subsequent periods. Expenditures that have been capitalized during the development phase are listed as development expenditures on the balance sheet and are converted to intangible assets from the date the project reaches its intended use.

94 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Intangible assets (Continued)
1. Impairment of intangible assets
  The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable amount is below the carrying amount (Note 2(16)).
Non-monetaryasset exchange
Non-monetary asset exchange refers to the exchange of non-monetary assets, such as fixed assets, intangible assets, investment properties, and long-term equity investments. The exchange does not involve or only involves a small amount of monetary assets (i.e. premiums). The exchange of non-monetary assets without commercial substance shall be measured on the basis of book value. For the assets to be swapped in, the enterprise shall use the book value of the assets to be swapped out and the relevant taxes and fees payable as the initial measurement amount of the assets to be swapped in; for the swapped out assets, no profit or loss is recognized when the assets are derecognized. For non-monetary asset exchanges that are measured on the basis of book value, and multiple assets are exchanged in or out at the same time, for multiple assets that are exchanged at the same time, the assets will be exchanged in accordance with the relative proportion of the fair value of each asset being exchanged. The total book value (involving the premium, plus the book value of the premium paid or the fair value of the premium received) is apportioned to the assets transferred, plus the relevant taxes and fees payable, as the initial measurement amount of the asset swapped in. If the fair value of the assets to be exchanged cannot be measured reliably, the book value of the assets to be exchanged may be apportioned according to the relative proportion of the original book value of the assets to be exchanged or other reasonable proportions. For multiple assets that are swapped out at the same time, no profit or loss is recognized when the swapped out assets are derecognized.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Impairment of long-term assets
Fixed assets, construction in progress, intangible assets with finite useful lives, investment properties measured using the cost model and long-term equity investments in subsidiaries, joint ventures and associates are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date; intangible assets which are not available for their intended use are tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. If the result of the impairment test indicates that the recoverable amount of an asset is less than its carrying amount, a provision for impairment and an impairment loss are recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognised on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.
Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in the subsequent periods.
Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Group in exchange for service rendered by employees or for termination of employment relationship, which include short-term employee benefits and post-employment benefits.
1. Short-termemployee benefits
  Short-term employee benefits include wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs, short-term paid absences. The Short-term employee benefit liabilities are recognised in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current year or the cost of relevant assets. Non-monetary benefits are measured at their fair value.

96 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Employee benefits (Continued)
1. Post-employmentbenefits
  The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the reporting period, the Group's post-employment benefits mainly include basic pensions and unemployment insurance, both of which belong to the defined contribution plans.
  Basic pensions
  The Group's employees participate in the basic pension plan set up and administered by local authorities of Ministry of Human Resource and Social Security. Monthly payments of premiums on the basic pensions are calculated according to the bases and percentage prescribed by the relevant local authorities. When employees retire, the relevant local authorities are obliged to pay the basic pensions to them. The amounts based on the above calculations are recognised as liabilities in the accounting period in which the service has been rendered by the employees, with a corresponding charge to the profit or loss for the current year or the cost of relevant assets.
Dividends distribution
Cash dividends are recognised as liabilities for the period in which the dividends are approved by the shareholders' meeting.
Provisions
Provisions for maintenance of the sewage water processing facilities are recognised when the Group has a present obligation, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, are taken into account as a whole in reaching the best estimate of a provision. Where the effect of the time value of money is material, the best estimate is determined by discounting the related future cash outflows. The increase in the discounted amount of the provision arising from passage of time is recognised as interest expense.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

9. Financial Reports

II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020 (All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Provisions (Continued)
The carrying amount of provisions is reviewed at each balance sheet date and adjusted to reflect the current best estimate.
The provisions expected to be settled within one year since the balance sheet date are classified as other current liabilities.
Revenue
The sales are recognised when control of the products or services has been transferred, and the amount is determined in accordance with the consideration received or receivables by authority. Revenue is stated net of discounts, rebates and returns.
1. Processing of sewage water and heating and cooling supply services
  Revenues from processing of sewage water and heating and cooling supply services are recognised when services are rendered.
2. Sales of tap water and recycled water
  Sales of tap water and recycled water is single obligation which is substantially the same which can be clearly distincted recognised on the transfer of risks and rewards of ownership, which generally coincides with the time when the tap water and recycled water are delivered to customers.
3. Sales of pipeline connection for recycled water
  The Group provides the pipeline connection for recycled water services, and recognises the income within a period of time according to the proportion of completed achievements to the total results agreed in the contract. On the balance sheet date, the Group reestimates the proportion of completed achievements to enable it to reflect changes in performance.

98 Interim Report 2020 Tianjin Capital Environmental Protection Group Company Limited

9. Financial Reports II. Prepared in accordance with the PRC Accounting Standards

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB thousand unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

Revenue (Continued)
1. Sales of pipeline connection for recycled water (Continued)
  When the Group recognises its income in accordance with the progress of completing projects, the part of the Group's obtained unconditional collection right is confirmed as receivables, the rest is confirmed as contract assets, and the impairment loss provision is confirmed on the basis of ECL for receivables and contract assets (Note 2(8)). If the amount received or receivable by the Group exceeds the amount of completed works, the excess shall be recognised as contract liabilities and the Group shall list the assets and liabilities under the same contract on a net basis.
  Contract costs include the performance cost and acquisition cost. The cost of providing pipeline connection identified as the contract implementation costs and the cost is recognised as operating cost according to the completing schedule included in the carrying forward cost of labor when recognise income. The incremental cost incurred by the Group to obtain the contract for the connection of water pipes is recognised as the contract acquisition cost. For the cost obtained in the contract with the amortization period of less than one year, the cost obtained by the contract shall be recorded into the current profit and loss when it occurs; for the cost obtained in the contract with the amortization period of more than one year, the Group shall, in accordance with the relevant contract, recognise the same basic amortization as the income of the project connected to the recycled water pipeline into profit and loss. If the Book Value of the contract cost is higher than the residual consideration expected to be obtained by providing the project minus the estimated cost to be incurred, the Group shall prepare the impairment provision for the excess part and recognise it as the impairment loss of assets. On the balance sheet date, the Group shall list the inventory and other non-current assets respectively according to whether the amortization period of the contract performance cost exceeds one year when it is initially recognised, so as to reduce the net amount after the relevant asset impairment provision. For the contract acquisition cost whose amortization period is longer than one year when the initial recognition is made, the net amount after the relevant asset impairment provision is deducted and listed as other non-current assets.
2. Sales of environmental protection equipment
  If the stage of completion can be measured reliably, revenue and cost are recognised by reference to the percentage of completion of the contract activity at the balance sheet date. The stage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs of each contract. Variations in contract work, claims and incentive payments are included to the extent that it is probable that they will result in revenue and they are capable of being reliably measured. The environmental protection equipment is mainly the achievement of technology research.

Tianjin Capital Environmental Protection Group Company Limited Interim Report 2020

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Company Profile

Tianjin Capital Environmental Protection Group Company Limited is engaged in water utilities business, and energy cooling and heating supply business. The Company's principal activities include the processing of sewage water, construction and management of related facility, supply of tap water, recycled water and supply of heating and cooling and management of related facility. Its segments include Tianjin plants, Hangzhou plants, Other plants, Recycled water, Heating and Cooling, Tap water, Sale of environmental protection equipment and All other. It provides design, construction and operations of sewage processing facility and financing, construction and transfer of sewage processing facility project services. The recycled water business includes developing, constructing and operating of recycled water projects, production and sale of recycled water, and provision of related research and development, and technical consultation services.

Sector

Water Utilities

Calendar

2024-08-27 - Q2 2024 Earnings Release (Projected)

More about the company

Income Statement Evolution

More financial data

Analysts' Consensus

Sell

Buy

Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

6.07

Average target price

Consensus

Annual profits - Rate of surprise

Company calendar

Sector Sewage Treatment Facilities

	1st Jan change	Capi.
TIANJIN CAPITAL ENVIRONMENTAL PROTECTION GROUP COMPANY LIMITED	+9.37%	1.19B
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SUNTAR ENVIRONMENTAL TECHNOLOGY CO., LTD.	-3.86%	595M
WUHAN TIANYUAN ENVIRONMENTAL PROTECTION CO.,LTD	-6.46%	591M
SHANGHAI EMPEROR OF CLEANING HI-TECH CO., LTD	+9.72%	567M
GUANGXI NANNING WATERWORKS CO.,LTD.	-15.14%	555M
CHINA EVERBRIGHT WATER LIMITED	+19.51%	521M
HEILONGJIANG INTERCHINA WATER TREATMENT CO.,LTD	-14.02%	507M

Sewage Treatment Facilities

Tianjin Capital Environmental Protection Group Company Limited

Equities

600874

CNE000000HX3

Water Utilities

Tianjin Capital Environmental Protection : Interim Report 2020

Latest news about Tianjin Capital Environmental Protection Group Company Limited

Chart Tianjin Capital Environmental Protection Group Company Limited

Company Profile

Income Statement Evolution

Analysts' Consensus

Annual profits - Rate of surprise

Sector Sewage Treatment Facilities