Dear investors and analysts, good afternoon. On behalf of BEWG, welcome to attend our Group's 2024 Annual Results Presentation. I am IR of BEWG Navis. Thank you for your long-term support. First of all, let me introduce the company leadership attending today's presentation. They are Executive Board Director and VP, Zhou Min of BEWG, and also Executive Board Director and VP, Li Haifeng; Secretary and Financial Director, Tung Woon Cheung, as well as Non-Board Director, Management and Rotating VP, Madam, Wang Zhupin. And now let's warmly welcome Madam Wang Zhupin to present 2024 Annual Results, please.

Dear investors and analysts, now on behalf of BEWG, I would like to present our 2024 annual results. First of all about our financial performance and all following numbers are in RMB. First of all, the key indicators as of December 31, 2024, main business revenue of the group registered RMB24.27 billion, 1% down by 2023. Net profit attributable to parent company was RMB1.68 billion, 12% of by 2023. Expected operational cash flow is RMB2.07 billion. Free cash flow is RMB1.48 billion of net inflow, 35% up than 2023. And the annual dividends is HKD16.1 cents per share, 2.55% higher than 2023. In H2 2024, it was HKD9.1 cents. It is based on the closing price of 26 of March 2025, and the dividend yield is around 7%. And the water treatment service revenue and net profit attributable to parent company both increased year-on-year. And for water treatment service, it was RMB12.25 billion, accounting for 50%, 5% higher than 2023. Net profit attributable to parent company was RMB4.86 billion, accounting for 87%, up by 4% than last year. The sewage and reclaimed water treatment service in China registered a revenue of RMB8.75 billion and also 7% higher than 2023. Mainly thanks to the higher water treatment, because of water plants were put into operation and the gross profit was 57%, 2 percentage points higher. It was mainly because of the water price raise and also the centralized reform to optimize the management. And in terms of water supply service in China, it registered a revenue of RMB2.53 billion, 2% higher than 2023, because of a higher water supply volume and the gross margin was 40%, 5 percentage points lower, because of the shrinking real estate market and auxiliary business with a higher gross margin was declined and also because of the established pipeline network projects, the depreciated amount of the assets of this period was higher and it pushed down the gross margin performance and in the future the water price will be adjusted to enhance the revenue. And in terms of the overseas projects, it registered a revenue of RMB907 million, almost at the same level as 2023. And the overseas projects, the gross profit was 22%, 2 percentage points lower than 2023, because of the high gross margin project in Portugal was exited. And in terms of construction service, the water environmental renovation construction was RMB830 million, almost the same level as 2023. And as all these projects were being put into operation. The EPC with cash flow and water environmental operations service occupy up to 85% of the total and the growth profit 18%, 10% points lower, because the EPC project with a higher profit were completed. It was back to normal, similar as 2022. And BOT construction revenue was RMB2.62 billion, 42% lower than 2023, because the group stopped investment into heavy asset project, transferring to the lower asset and lighter asset project and the gross profit 17%, same as 2023. Technical service and sales of machinery revenue RMB2.55 billion, 4% higher than 2023, thanks to the higher revenue of light asset projects. And the gross profit 42%, 1% point lower than 2023, because the consultancy service with a higher gross margin occupied a lower share in terms of urban resource service, the revenue RMB6.03 billion, 19% higher than 2023, because the urban service projects newly contracted and newly acquired were put into operation generating new revenue and the gross profit 19%, 1 percentage point lower than 2023, because of the lower price of the hazardous and wastewater treatment market. And in terms of the capital expenditure, it was RMB4.11 billion, 41% lower than 2023, because of our transition towards lighter assets with lower investment into BOT. And in terms of the management cost, first of all overheads, we enhanced our operation management efficiency and the overheads in 2024 was RMB3.07 billion, 7% lower than previous year. And in terms of financial expenses with the foreign currency swap and project loan optimization and other related initiatives. The financial cost in 2024 was RMB3.09 billion, 5% lower than previous year. And the comprehensive financing cost at the end of year was around 4%, 28 basis points lower than 2023. And in terms of asset and liability, in terms of book cash and cash equivalents, by the end of last year it was around RMB9 billion. And in terms of net liability ratio, by the end of last year, it was increased to 119%, 1 percentage point higher than 2023. And let me bring you some interpretation of our operation. First of all, in terms of the water projects and water business, in 2024, we've got a newly contracted water of up to 530 tons per day, and 430 ton per day were light asset projects. And the total exit water volume was 760,000 ton per day, and 310 ton per day were under negotiation with government, and 230,000 tons per day were initiatively exited by BEWG, and 220 tons per day were due. 380 tons per day project got renewed in the contract, but it was not included in the above numbers. As of 31 of December 2024, we've got altogether 716 township sewage plants, 73 reclaimed water plants, 174 water suppliers, and one seawater desalination plants, 508 township sewage facilities, so altogether 43.74 million tons per day. And also we operate 605 sewage plants, 48 reclaimed water plants, 160 water suppliers, one seawater desalination, 445 township sewage water facilities, and altogether we operate 33.86 million ton per day. And in terms of water price adjustments, the weighted average price was RMB1.54 per ton increased by 3.36% than 2023. And in Mainland China, the average water price is RMB2.15 per tonne, same as 2023 in terms of the construction size in 2024, it was 2.27 million tons per day and 1.01 million tons per day were completed in 2025. 430 tons per day is expected to be started construction. And in Mainland China in 2024, there were no new water renovation projects added. 16 were under operation, 10 under construction, nine were light asset projects with a value of RMB1.97 million occupying 0.96% and one is heavy asset project and it is basically completed. And speaking of sustainable development, that is my third main point. With after two years of preparation, establish a WISE ESG Management Framework System. WISE refer to Water Intelligence Satisfaction and Ecology. And we target at meeting all stakeholders' requests. And we've set up a new ESG target to enhance operation management and also to fulfill our group development strategies, so that we very effectively implement our ESG strategy to form a closed loop of management within the group. And we practice the strategy within the group and also we enhance our information disclosure performance to enhance our management quality. And in 2024, we upgraded the WISE disclosure framework, meeting the requirements of [HKSE] (ph) and also to better meet expectations of all stakeholders. And the key performance results will be released in detail in the 2024 Sustainable Development Report, which will be issued in April 2024. Please stay tuned for that. And in the beginning of March 2025, our rating was changed from A to BBB, according to MSCI. And it was done before our ESG information were disclosed, and the main reason was because of the ESG risk exposure level, which was up, and the topic of health and security were added, but this topic was not synchronized to other water companies around the globe. And to respond to this, within BEWG, we set up three key tasks. First is to have more frequent emails with MSCI to understand why our rating was changed. It was downgraded. And the second is to add more supplementary disclosed information to include such information into our 2024 report of sustainable development. And thirdly, we implement more improvement measures. We step up training and communication within the group. And at the same time, we work together with the suppliers to enhance our ESG endeavor, so that we can attach more importance to health and safety management and production, and also to respond to our rating risks and at the same time to make sure our ESG strategy will be really working, so that we can provide more opportunities for high quality sustainable development for the group. And the fourth main point of my presentation is about our development plan for 2025. It will be a key year. We need to consolidate the fundamentals of our operation. And we need to focus on our cash flow and the value of our company, which is profit. So we will focus on three main topics

cash flow, operational efficiency, and talent development. Cash flow will always be the priority. We will optimize the cash flow management, and the amount receivable must be highlighted. And also, we are going to make better use of the government's resolving debt mechanism to work together and figure out the best solutions with our clients to collect the money. And the second, we will enhance the operational efficiency, and we will implement the model of cloud chain and terminal, so that we can cultivate our core competitiveness, combining our business and the finance together, and we will use digital tools as well. And thirdly, we will upgrade talent structure. We build our own talent development mechanism to activate the vitality of our organization. And in 2025, BEWG will continuously enhance operational fundamentals to strive for high quality sustainable development, so that we can feedback more positively our stakeholders with the profit and better revenue performance. And in 2025, we will focus more on commissioned operation and other light asset projects and in 2025, we expect the overall revenue of the group to be the same level as 2024. And in terms of water business, main business, it will be around 5% up. And in terms of construction, it will be 40% down. And in terms of technical service and sales of machinery, it will be up by 5% and urban resource services will be 10%, up and net profit attributable to parent company will be RMB1.5 billion. And the overall business will be at the same level as 2024. In terms of capital expenditure, it will be around the RMB5 billion and the net liability ratio will be maintained within 140%. And in terms of free cash flow in 2024, the free cash flow will register around RMB2 billion and it will be lower gradually with the capital expenditure. And the free cash flow will enhance by 10% every year. And if the collection, money collection, by government will be better, maybe our profit and revenue will be better to provide a positive feedback to the stakeholders. Thank you. This is all of my presentation. And now we move on to Q&A session.

And questions in English is not available yet. You can have more communication with the leadership after today's conference. So please call to ask your question or leave your question in the chat box in the online meeting room. And before asking the question, please introduce yourself. And the first question with a telephone number, last four digits, 3588.

Hi, can you hear me?

Yes.

Dear management, I am [Zhou Ningxuan] (ph). And thank you very much for the presentation. We noticed under pressure in 2024, still the company achieved very good performance in dividends distribution. So I learned that in 2024, there was a quite fixed dividends distribution policy in 2024 with a continuously improved cash flow? Do you think the dividend policy will also be upgraded or improved? And I would like to ask more about the collection of cash flow in 2024? And the third question is about water price adjustment and also any plan for 2025-2026 in terms of water price? Thank you.

Hi, Mr. [Indiscernible], let me try to answer your questions. First is about dividends, in 2024, our 2024 policy in distributing dividends was not fixed, it was up by 2.55 percentage points. I already mentioned that in the presentation, because it already entered the mature period of operation of all the projects. So the cash flow is improved and it is expected that the free cash flow will increase by RMB1 billion annually for the next following up years. So I believe the dividends distributed will be improved as well. In terms of payment collection, in 2024, it was actually lower than the target we set at the beginning of the year. It was mainly because of local fiscal reasons, because, you know, for the local government, they need to allocate their budget to more important areas related to livelihood. So we were still under pressure in terms of payment collection, but still in 2024 there were a basket of policies coming out. We tried to seize those opportunities to enhance our payment collection capability, but in terms of that resolving, that dissolving mechanism. In 2024, those were mainly, those were -- those policies were mainly used to dissolve the implicit debt that we're about to do. So those debt dissolving mechanism were not implemented for us mostly. And in terms of the receivables, we were still aiming to enhance our capability of collecting all the receivables, but we were still under green pressure. And in terms of your third question, water price, in the beginning of 2024, there were very favorable policies for water price raise, basically in all places around the country. Work was started to enhance the water price and at that time we were quite optimistic. However, throughout the whole year, we found that the economic recovery was not as optimistic as we expected. And hearings on water price adjustments held in different areas aroused a great sensation from the society and people were having opinions on that. So water price rates were slowed down and among 36 key cities nationwide only four planned to raise the water price but they were also at a very slow pace than they planned. But actually, for next year, we were quite optimistic, because we can see the water price base nationwide is quite low and we haven't adjusted the price for 11-years already, so I believe in the year 2025 as long as it's feasible to raise up the price as long as the basic conditions were met, we plan to enhance the water price end because of the shrinked real estate market. The water price is expected to be up. And our water supply business unit is responsible for that within our group. We already started to focus on the key procedures of water price rise. And we've started in a very orderly manner our work adjusting gradually the water price. And in 2025 we will evolve a capacity of 1.2 million tons per day in terms of water price adjustment. And we're working with several water companies on that and some of them have taken steps already, but it is still under the regulation of the local government. So there is still some level of uncertainty in terms of the outlook of water price adjustment.

Thank you for answering my question. They are all very clear and hopefully in 2025 we can see a better performance coming out of BEWG.

Thank you for the question and the answer. Next question.

Hi, thank you for this opportunity. Thank you for your continuous high return of investment to all the stakeholders. The first question from me is still about cash flow. We could see the total cash flow was RMB2.5 billion? And how much was from water environment renovation? You mentioned this business sector was under pressure. The 2025 year target was RMB500 million more and how would you evaluate water environment renovation business in 2025? And also you mentioned about the autonomous that resolving and how about that in water environment renovation? And also you mentioned that for 2025 there was a drop of 40%. Can you tell me more about that on the number? I think development as well, you mentioned that we hope we can make use of high tax, so that we can enhance the revenue and value? Is there anything you would like to share with the investors in terms of that?

Hi, let me answer your first question about operational cash flow. It was RMB2.1 billion, but that was our legal statement. But in terms of statements related to the management, it is not available yet. Later, you can ask our IR for that. And speaking of your second question, we expect our free cash flow to grow by RMB1 billion per year in the future. And it was not including payment collection from water environmental renovation. It was not optimistic enough, but based on what we know about the policies we are quite optimistic, because of the following reasons. First of all, our management team has received PPP policy solutions from the national-level government. And it is now still a draft soliciting opinions, but it is about to be released very, very soon. And the second is about debt resolving or debt resolution, several policies of debt resolution in 2024, the debt resolution capital of RMB10 trillion, mainly to resolve the implicit debt in 2023. And the local government would decide how to make use of the capital, and we have quite optimizing expectations for that. And when Minister Lam emphasized on the debt ratio, without mentioning our total debt value at all levels, the central government is still trying to estimate the total debt value. Ministry of Finance gave the calibers of statistics, but MIT and other ministries are offering their standards as well. And we believe in the second-half of the year, more policies on debt resolution will be out. In 2024, we received RMB900 million for debt resolution, and now we have already RMB7.66 billion of debt resolution capital included into the statistics of Ministry of Finance. So we look forward to debt resolution performance next year. And let me offer you more data on management cost. We offer you an estimate of RMB5 billion. It is based on the same standard as 2024. It is based on direct cash payment. And on our financial statement, you noticed it was around RMB4.1 billion. And it is in line with changes in the BOT construction expenditure, because we have around RMB1 billion spent on capacity expansion and RMB500 million on technology development and the rest of the capital would support to pay for the previous projects. But for the previous projects, they were included in the financial statement in previous years, so they are not demonstrated in this year's financial statements.

Thank you.

And also speaking of technology leadership of the BEWG, thank you for paying attention to our two technology subsidiaries, technology company and the cloud service company. But actually it would be a very slow process to cultivate a company. And the performance of these two subsidiaries cannot showcase that quickly or that soon in the financial statement. We are continuously developing high-tech skills to empower fully modernized management of BEWG, deploying intelligent robots to realize intelligent regulation of key parameters of our facilities. So the water plants can realize refined management and reduce energy consumption in operation. As ED system is launched 100% for all of our water plants. 40% of our water plants have got intelligent robots appliance. We noticed a significant efficiency improvement in 10% of the water plants. Our [portfolio] (ph) policies based on intelligent technology is saving more energy and power consumption by our water facilities. And we also hope that you can keep paying more attention to our tech companies' performance.

Thank you. Thank you. They're all very clear answers.

Next, we will invite [Shaoxiao] (ph) to ask the question.

Thank you for giving me this opportunity to ask. What’s your expectation of capital impairment in 2025?

In 2024, the total capital or asset impairment was RMB800 million, and in 2025, if the local fiscal condition will not be improved, we believe the impairment will stay at the same level in 2025. Because we evaluate the macroeconomic environment and the management implemented initiatives to prevent risks. And in the past years, we enhanced the proportion of expected impairment and also to relieve the pressure of payment collection, but in recent years we observed no sign of fiscal condition improvement. So for some high-risk projects, we enhanced reserves. We improved the reserves for these projects. And for PPP project, we strengthened our support and we believe in the future, the cash flow elasticity will be enhanced as well.

Thank you. And one more question about dividends. The profit is around RMB1.6 billion, and do you think there is a possible upper limit of the total amount for dividends in the future cash flow maybe better. Do you think the dividends will be more than like 100%?

It depends on the performance of our free cash flow. If it is good enough, then our strategic and operational measures will be adjusted. And it's possible that the dividends proportion will be higher, but whether or not there will be a lot of upper limit, it is not decided yet, but we expect the dividends to be growing year-by-year.

Thank you for the question and the answer. We've got a message from [Shu Xin] (ph). This question is about asset impairment, and this is already answered, but with the background of debt resolution, do you think the situation will change? How much funds for debt resolution would be obtained, and also the financial expenditure and overheads will both be reduced in 2025. Can you introduce more on that?

While speaking of the funds for debt resolution, now from the BEWG already RMB766 billion of debt resolution funds were included into the national government's debt resolution pool. We still have a lot of work to do, but one thing for sure for the management is that in 2025, this will definitely outperform that in 2024. Have strong confidence in that. For overheads, for our management cost, we already made a three-year plan of controlling management cost and financial cost, and the target is RMB800 million to RMB1 billion. And the source of the cost reduction comes from two aspects. First is to serve our transition towards light asset management. So we restructured the company and we built our talent development plan. So the whole leadership team is streamlined and the whole talent structure is optimized. And the second source of cost reduction is the centralized reform that is still ongoing. And the human resource management will enjoy a higher efficiency and management quality and all the resources will be allocated in a more reasonable way. In 2023 and 2024, already 27 regions under the group realized centralized reform and in the new year we plan to make that up to 100% centralized management, centralized reform completed. So that is my answer to your question. Speaking of the financial expenses, so it goes hand-in-hand with our three-year cost reduction plan. And first of all, we used foreign currency swap and the loan currency swap and also the interest rate negotiation to optimize the financial cost and the comprehensive financing cost 4.01% and we reduced the financial cost by RMB200 million. And we continuously optimize the foreign currency structure of our company. And through the whole year 2023, we finished the foreign currency swaps and we saved a cost up to more than RMB93 million. And with the opportunity of LPR 6% lower, we further controlled the cost and we realized that the swap of RMB10.2 billion of bank loans. And through that, we saved the cost by more than RMB70 million as well. And in terms of the securities we issue, they were at a comparatively lower price 2.52%, lowering the cost by more than $22.36 million. And in the new year, we will continue to better control our financial cost. And speaking of the target of 2025. Actually at the end of the year 2024, the financing cost is 3.5% and we hope another 0.5 percentage points would be lower in fundraising cost in the new year.

Thank you for the answer.

And I see one more question about the management caliber cash flow in 2024?

It is not yet available. We need to wait until the end of April when the overall financial statement is released. Please stay tuned for that.

And we noticed our Hong Kong investor calling in to ask a question.

Hi, can you hear me?

We have no access to this Hong Kong investor. We move on to next question.

Thank you for this opportunity.

Sorry, we can't hear you clearly.

We're excited to see the annual results and expectations, especially in terms of the cash flow dividends. But I still have some more questions. The first is we can see 2024 annual performance of BEWG is quite good, but in terms of urban resources, the revenue slipped to some extent? And what do you see of its future? And what's your attitude towards their business? And the next question is about water environment engineering. We can see some projects may be exited earlier. In addition to payment collection from local government, is it also possible to withdraw certain products earlier for cash flow collection? The third question is about the share proportion of sewage and water environment in terms of negotiation with the local government?

Let me answer your first question about urban resources. Since we combined our financial statements with being strengthening control of BEUR's board of directors, the stakeholders and shareholders. And now their management is already under the whole framework of BEWG. And speaking of the strategy of BEUR, first, the urban service as a priority should be progressed steadily. And the main targets are to enhance revenue and profit, to lower the growth rate, so as to keep risks well regulated. And in terms of hazardous and wastewater treatment, we encounter some obstacles indeed. And for this sector of business, we will maintain the current treatment capacity, and at the same time, we will digitize this business sector to enhance its quality and efficiency. And we keep developing high added value treatment technology to make better use of the environmental resources. And we are exploring new models of treatment in this area. And your second question is about our water environment projects and also assets of such projects. Just as you said, our water environment project in 2025, we already included such projects into our low efficiency asset scope. We will work together with the local government to dispose such assets. And for the project not completed yet, we need to finish the engineering first of all. And then speaking of the compliance of the engineering projects, we must be made sure to comply with the law and regulation. And about payment collection, we've adopted two strategies. The first is to see the capability of the local government in terms of the paying operational expenses and other expenses. After negotiation with the local government, if we feel about their pressure in such, we will work together, use the debt resolution funds to turn the PPP projects of water environment treatment into the light asset projects to lower the pressure of the local government to pay. And if the local government is willing to collect the project fully back, BEWG will also support local government in that. And for water environment project, BEWG attaches great importance to that, because they've been incorporated into the low efficiency asset portfolio, we could make those projects exited or we could turn them into light asset projects. And the third question is about your promised repayment -- among the promised repayment, what is the share proportion of sewage and water environment? I have the total figure RMB7.66 billion, but I do not have a proportion of sewage and water environment respectively. You can further contact our IR team so that they provide you the number later.

Thank you. And in terms of the -- our sanitary or environmental sanitation projects, how would you evaluate that?

We've got a strategic management framework for the urban resources services. One key item under that framework is about payment collection of environmental sanitation projects. In 2024, BEUR's payment collection is 86%. And in terms of hazardous and wastewater it is 98% the same as last year. Of course in 2025, we hope it could be improved, because it is included in our KPI system.

Thank you. Very clear answers and I wish further improvement in cash flow of BEWG. Thank you.

[Operator Instructions] Thank you for your long-term support to BEWG, and thank you, dear management, for your detailed answers. And we hope we can meet at our next results presentation. Well, please also contact IR for further questions. Thank you.