March 2017 Strictly Private and Confidential Disclaimer This - - PowerPoint PPT Presentation

2016 Annual Results Presentation

March 2017

Strictly Private and Confidential

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Disclaimer

This presentation incorporates information contained in the annual results announcement (the “Results Announcement”) for the year ended 31 December 2016 of CT Environmental Group (the “Company”). This presentation should be read in conjunction with the Results Announcement and is qualified in its entirety by the more detailed information and financial information contained in the Results Announcement. Other than the information contained in the Results Announcement, you shall not reproduce or distribute this presentation, in whole or in part, and you shall not disclose any of the contents of this presentation or use any information herein for any purpose without the Company’s prior written consent. You hereby agree to the foregoing by accepting delivery of this presentation. The contents of this presentation have not been reviewed or approved by any regulatory authority in Hong Kong or elsewhere. The contents of this presentation are not investment, legal or tax advice. You are advised to exercise caution in perusing the contents of this presentation. If you are in any doubt about any

• f the contents of this presentation, you should obtain independent professional advice.

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Agenda

• Strategic Overview and 2016 FY Highlights
• Mr. Lu Yili, CEO
• 2016 FY Financial Overview
• Mr. Edwin Ma, CFO
• 2017 Strategic Focus
• Mr. Lu Yili, CEO
• Q&A

Strategy Overview and 2016 FY Highlights

• Mr. Lu Yili, CEO

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Leading environmental protection solution provider

 CT Environmental Group is at the heart of an environmental and

resource revolution

 There are increasingly favourable government policies to facilitate

economic growth in a more environmentally-friendly way along with enhanced regulation of the protection treatment service

 We are well positioned to take advantage of the growing market

demand for high-quality integrated industrial waste management solutions

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Market Position & Strength Growth Strategy 2016 Progress

Early mover in the industrial wastewater treatment segment with well-recognized franchise and effective BOO model Ongoing diversification of our customer base Strong R&D capability & significant project development experience Continue to broaden our expertise and service offerings Vertical expansion into sludge treatment Sector & effective diversification into hazardous waste treatment sector Penetrate into new provinces

A leading player in industrial waste treatment area with strong entrepreneurship and project track record poised to capture growth in a juncture when China advocates environmental consciousness

Establishment of greenfield projects in Guangdong Longmen as an integrated solid waste environmental protection base Significant progress on the first flagship project in Guangxi market, an energy- saving environmental protection industrial park project Successful integration of acquisitions

CTEG continues to deliver on long-term strategy

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2016 FY performance highlights

CTEG delivered strong growth and further strengthened its core businesses

• Strong revenue growth of approx. 30% to RMB1.87bn on sustained growth of three core

businesses

• Maintained steady gross profit margin at 46%
• Net profit impacted by one-off items, decreased by 13%

–

Recurring net profit increased approx. 17%

• Major corporate actions

–

Expansion beyond homebase into Guangxi Zhuang Autonomous Region with first comprehensive flagship project

• Final dividend of HK0.67 cents per share for the year ended 31 December 2016
• Special dividend of HK0.86 cents per share in connection to the profit from disposal of land

in 2017

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Core Business Segment Industrial Wastewater Treatment Sludge Treatment Hazardous Waste Treatment Fiscal Period 2016 2015 2016 2015 2016 2015

• No. of Projects

7 6 3 3 6 5 Operating Capacity 579,500

m3/day

575,000

m3/day

3,442

tonnes/day

3,142

tonnes/day

830,000

tonnes/year

330,000

tonnes/year

Average Utilisation Rate 62% 58% >100% 93% 48% 65%

Achieved growth across all three business segments

• Industrial wastewater treatment:

–

Processed volume of six existing industrial wastewater treatment facilities recognised organic growth of 8% YoY

• Sludge treatment:

–

Increased overall capacity driven by strong demand from customers

• Hazardous waste treatment:

–

Overall increase in operating capacity primarily due to commencement of Nansha Marine Conservation Centre with profitability at 31% utilisation rate

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Strong pipeline offering high visibility for 2017-8

Projects Segment Business Model Capacity Status/Estimated Time of Operation Guangxi Yulin (Water) Water Treatment BOO IWWT: 50,000 m3/day; IWS: 50,000 m3/day 2017 Q2 Guangxi Yulin (Sludge) Solid Waste BOO Sludge: 200 tonnes/day 2017 Q2 Longmen Industry Base Solid Waste BOO Sludge: Phase I: 500 tonnes/day Industrial Solid Waste: 300,000 tonnes/year 2017 Q3 Longmen Industry Base Solid Waste BOT Waste-to-energy: 600 tonnes/day 2017 Q3 Yinghong Park (Phase I) Water Treatment BOO IWWT: 20,000 m3/day; IWS: 50,000 m3/day 2017 Q4 Sichuan Guangyuan (Phase I) Water Treatment BOO IWWT: 50,000 m3/day; IWS: 50,000 m3/day 2017 Q4 Yulin Chinese Medicine (Phase I) Water Treatment BOO IWWT: 5,000 m3/day 2018 Q1 Xinfeng Lvzhi Solid Waste BOO Industrial Solid Waste: 350,000 tonnes/year 2018 Q1 Yonghe Haitao (Phase IV) Water Treatment BOO IWWT: 50,000 m3/day Under planning

2016 FY Financial Overview

• Mr. Edwin Ma, CFO

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2016 FY financial highlights

• Delivered strong topline growth and maintained steady gross profit margin
• Net profit was impacted by one-off items, impairment on non-current assets and foreign exchange loss

2016 FY 2015 FY % Change Turnover 1,865.9 1,435.0 +30.0% Gross Profit 852.3 715.5 +19.1% Profit Attributable to Equity Holders 519.1 598.9

• 13.3%

Recurring Net Profit 589.6 503.7 +17.0% Basic EPS 0.08 0.10

• 20%

(RMB mm)

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37% 33% 10% 5% 5% 3% 7%

Strong sector penetration leading to revenue diversification

50% 25% 6% 3% 6% 3% 7%

2016 2015 Revenue Breakdown by Customer Revenue Breakdown by Sector

34% 25% 16% 20% 5% 30% 26% 22% 16% 6%

RMB 1,866 mm RMB 1,435 mm

Textile Automobile Manufacture Municipalities Water Treatment Sludge and Solid Waste Treatment Hazardous Waste Treatment BOT Project Construction Service Heating Service Electronic Chemical Papermaking Others

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Margins remain stable

EBITDA Margin, Gross Margin and Net Margin

56% 57% 50% 55% 54% 50% 42% 46% 38% 42% 28% 28% 1H2015 FY2015 1H2016 FY2016 EBITDA Margin Gross Margin Net Margin

Recurring* EBITDA Margin, Gross Margin and Net Margin

58% 59% 58% 59% 53% 54% 54% 55% 29% 29% 30% 28% 1H2015 FY2015 1H2016 FY2016 Recurring EBITDA Margin Recurring Gross Margin Recurring Net Margin

*Add back VAT refund to turnover, exclude income from BOT construction services, entrusted operation and one-off gain/loss

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139.3 256.2 2015 2016 70.2 88.2 2015 2016 9.7% 12.9%

% of Turnover

4.6% 4.5%

Effective interest rate

Administrative Expense Finance Cost

(RMB mm)

Expense analysis

• While costs and expenses increased, the ratio of cost as a percentage of turnover remained steady

13.7% 14.9

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Other financial indicators

As at 31/12/2016 As at 31/12/2015 31/12/2016 vs 31/12/2015 A/R Balance (RMB million) 554.9 411.4 +34.9% A/R Turnover (days) 97.5 94.7 +2.8 days

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56.3% 55.8%

31/12/2015 31/12/2016

Maintained healthy gearing ratio

(Total Bank Borrowing – Cash) / Total Equity

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Capital expenditure

27% 50% 65% 12% 8% 38% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2016 2015 Water Treatment Sludge and Solid Waste Treatment Hazardous Waste Treatment

RMB 669 mm RMB 1,197 mm

2017 Strategic Focus

• Mr. Lu Yili, CEO

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Well-positioned to capture growth

• Government’s commitment to environmental protection

and associated policies increases

• Proven track record of delivering
• Focus on geographical expansion

Q&A

APPENDIX

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CTEG business model

• CTEG

–

Established business with strong track record in industrial wastewater, sludge and solid waste, and hazardous waste treatment solutions

–

Best positioned to capitalise on opportunities brought about by fighting global climate change and national policy

–

Solid management team with operational excellence to deliver

Waste generating enterprises

Solid waste treatment facilities Wastewater treatment facilities Hazardous waste treatment facilities CTEG’s major customers Industrial water supply facilities

Untreated solid waste Untreated hazardous waste Untreated wastewater Reclaimed water (water recycling) Industrial water supply

Landfill, incineration and resource utilisation Landfill, incineration, resource utilisation and concentrated sewage treatment Treated wastewater being discharged

Sludge produced in the wastewater treatment process

Nutrition soil, green brick and light ceramsite

Sludge treatment facilities

Business Model

Committed to becoming China’s leading one-stop industrial waste management solution provider