Canvest Environmental Prtctn Gp : 2017-08-16 Announcement of Interim Results for the Six Months Ended 30 June 2017

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CANVEST ENVIRONMENTAL PROTECTION GROUP COMPANY LIMITED

粵 豐 環 保 電 力 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1381) ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2017 HIGHLIGHTS Financial Highlights

For the six months ended 30 June
2017	2016	Change
Revenue (HK$'000)	1,158,013	670,039	+72.8%
Included: Revenue from power sales and waste treatment (HK$'000)	444,211	375,470	+18.3%
Gross profit (HK$'000)	351,874	247,575	+42.1%
EBITDA (HK$'000)	398,988	286,964	+39.0%
Profit for the period (HK$'000)	226,135	153,843	+47.0%
Profit attributable to equity holders of the Company (HK$'000)	226,135	153,843	+47.0%
Basic earnings per share (HK cents)	10.1	7.7	+31.2%
Interim dividend per share (HK cents)	1.3	1.1	+18.2%
Cash generated from operating projects (HK$'000)(1)	282,077	193,251	+46.0%

Note:

1. Cash generated from operating projects represented net cash generated from/used in operating activities for the period, excluding net operating cash used for construction of various WTE plants under BOT arrangements.

   Operational Highlights

   • During the period under review, the Group implemented innocuous treatment of waste volume amounted to 1,482,607 tonnes. The Group generated 608,226,000 kWh from green energy, saving 211,805 tonnes of standard coal and emission reduction of carbon dioxide amounted to 528,030 tonnes.

   • During the period under review, Eco-Tech II WTE plant and phase 2 of Xingyi WTE plant had commenced operation, and Zhongshan WTE plant (project operated under management agreement) is under testing stage.

   • In January 2017, the Company entered into a non-legally binding strategic cooperation agreement with BOC & UTRUST and Utrust International.

   • In February 2017, the Company and True Victor, a wholly-owned subsidiary of SIHL, entered into the subscription agreement, pursuant to which the Company conditionally agreed to issue and True Victor conditionally agreed to subscribe, 300,000,000 subscription Shares at the subscription price of HK$3.5 per subscription Share. Completion took place in March 2017.

   • In March 2017, Kewei was conditionally awarded the BOT concession right in relation to the Xinyi WTE plant. A framework agreement has been entered in this regard.

   • In April 2017, IFC exercised the conversion rights attached to the outstanding convertible loan and the Company has allotted and issued an aggregate of 121,096,875 conversion Shares to IFC at the conversion price of HK$3.84 per conversion Share.

The Board is pleased to announce the unaudited consolidated results of the Group for the six months ended 30 June 2017. The condensed consolidated interim financial information has been reviewed by the audit committee of the Company and the Company's independent auditor, PricewaterhouseCoopers.

CHAIRLADY'S STATEMENT

To all honorable shareholders,

On behalf of Canvest Environmental Protection Group Company Limited, I am pleased to report the satisfactory interim results of the Group for the six months ended 30 June 2017 (the "Period").

In the first half of 2017, China continued to have stable economic growth, and green development remained one of the key subjects. Echoing the philosophy of "Lucid Waters and Lush Mountains are Invaluable Assets" (綠水青山就是金山銀山), green, circular, and lower-carbon development is a clear direction for the Central Government. Specific environmental protection policies were released to ensure the healthy development of the market. The "Plan for non-hazardous waste treatment facilities under the 13th FYP" ("十三五"全國城鎮生活垃圾無害化處理設施建設規劃") was promulgated at the end of 2016, which layout the target national WTE penetration rate to about 54% by 2020, a significant increase from the 31% penetration rate as of the end of 2015. Of all the provinces which need to increase processing capacity, Guangdong Province, which is Canvest's base and major market, ranks the highest and accounts for about 15.4% of the national target.

To capture the above-mentioned opportunities and increase our market share, the Group has, on the one hand, formed a strategic partnership with BOC & UTRUST and Utrust International, the parent company of Utrust International, Utrust Holdings is a company directly under the People's Government of Guangdong Province and is managed and supported by the Department of Finance of Guangdong Province; and on the other hand, allotted and issued 300 million new Shares to True Victor, an indirect wholly-owned subsidiary of SIHL, making SIHL our second largest Shareholder. With the market reach, resources, and support by both Utrust Holdings and SIHL, we are well- positioned to increase our market share in the Guangdong Province and strategically set to expand our business on a national basis.

In April 2017, IFC has exercised its conversion rights to convert its outstanding convertible loan of HK$465,012,000 into 121,096,875 Shares at HK$3.84 per Share, translating into a 4.9% shareholding in Canvest. This demonstrated IFC's confidence in the management of Canvest, and also the long- term business prospects of our Company.

In addition, our existing Shareholder, AEP, a substantial Shareholder of the Company, increased their shareholdings to 5.6% of the total issued share capital of the Company during the Period. The continued support from our existing shareholders are clear votes of confidence in Canvest's capability, achievement and prospects.

Financial Performance

During the first half of 2017, the Group's revenue increased by 72.8% year-on-year to HK$1,158.0 million, and the profit attributable to equity holders of the Company increased by 47.0% year-on- year to HK$226.1 million. The increase was mainly attributable to the increase in construction revenue arising from additional projects under construction.

After taking into consideration of the Group's development plan and investment returns to our Shareholders, the Board declared an interim dividend of HK1.3 cents per ordinary share (corresponding period in 2016: HK1.1 cents).

Business Review

In March 2017, the Group secured the Xinyi WTE plant in Maoming with a daily MSW processing capacity of 750 tonnes, which further strengthened our position in the Guangdong Province. Based on increasing service demand and satisfactory performance of phase 1 of Xingyi project, phase 2 of Xingyi project received approval from the Guizhou Development and Reform Commission for 500 tonnes daily MSW processing capacity, an extra 150 tonnes processing capacity from the original BOT contract amount. Furthermore, Eco-Tech II WTE plant and phase 2 of Xingyi WTE plant had commenced operation, and Zhongshan WTE plant (operated under management agreement) is under testing stage in the first half of 2017. With strong business development capabilities, our total number of projects on hand has increased from 4 at the time of listing to 13 as of today, and the corresponding total operating, secured, announced and managed daily MSW processing capacity has increased from 6,900 tonnes to 19,240 tonnes.

Outlook

Going forward, we expect there will be more policy support on the optimization and advancement of the standards and operation of the MSW industry. Pursuant to the "Opinions on Further Strengthening the Incineration of Municipal Solid Waste Treatment", the government puts great emphasis on better site selection, higher standard for WTE plant construction, effective coordination on project development and tighter administration and control of WTE projects. With these strong policy support, we believe the MSW industry will continue to experience stable growth in the coming years. We will continue to seize opportunities for WTE projects in China, focusing on municipal waste and exploring relevant new opportunities to continue our journey of success. We believe that increasingly stringent policy and higher standard requirements will help to foster market development, and can benefit Canvest in the long run.

As a responsible listed enterprise, we are committed to maintain close and timely communication with the investment community. We had won the Overall Best Investor Relations Company and numerous awards at HKIRA's Investor Relations Awards -Small Cap for two consecutive years. In addition, we were accredited as an EcoChallenger under Corporate Environmental Leadership Awards 2016. We will continue to make it our priority to maintain transparency and high standard of corporate governance.

On behalf of the Board, I would like to express our deepest gratitude to our Shareholders, business partners and stakeholders for their unwavering support, and also to all of our staff for their dedication and devotion.

Lee Wing Yee Loretta

Chairlady

Hong Kong, 16 August 2017