Dynagreen Environmental Protection : 2020 Interim Report

Stock Code : 1330. HK & 601330. SH

2020INTERIM REPORT

IMPORTANT NOTICE

1. The board of directors (the "Board"), the supervisory committee and the directors (the "Directors"), supervisors (the "Supervisors") and senior management of the Company hereby warrant the truthfulness, accuracy and completeness of the contents of the interim report, guarantee that there are no false representations, misleading statements or material omissions contained in this interim report, and are jointly and severally responsible for the liabilities of the Company.

1. All Directors of the Company were present at the Board meeting.

1. This interim report is unaudited.

IV. Qiao Dewei, an officer of the Company; Hu Shengyong, the Chief Financial Officer; and Zhao Linbin, the Chief Accountant, declare that they warrant the truthfulness, accuracy and completeness of the financial statements in the interim report.

1. The audit committee of the Board has reviewed this report and has also discussed with the management of the Company regarding the accounting policies and practices adopted by the Company and internal controls.

VI. Proposal of profit distribution or capitalisation of capital reserve during the Reporting Period approved by the Board

Nil

VII. Risk statement relating to forward-looking statements

• Applicable □ Not applicable

Forward-looking statements such as future plans and development strategies described in this report do not constitute an actual commitment of the Company to investors. Investors should be aware of the relevant risks.

VIII. Whether there was any appropriation of the Company's funds for purposes other than operations by the controlling shareholder and its related parties

No

IX. Whether there was any provision of guarantee to external parties in violation of the stipulated decision-making procedures?

No

1. Major risk alerts
   Policy risk, market risk, business risk and other risks that may exist have been described in this report in details. Please refer to the risk factors likely to be faced as set out in other disclosures in IV. Discussion and Analysis of Operations.

XI. Others

• Applicable □ Not applicable

The 2020 interim financial report of the Company was prepared in accordance with the China Accounting Standards for Business Enterprises promulgated by the Ministry of Finance of the PRC and the relevant provisions (the "PRC Accounting Standards"), and is unaudited. The functional currency of this interim report is Renminbi (RMB), unless otherwise specified.

The contents of this interim report are in compliance with all the requirements in relation to information to be disclosed in interim report under the Standards for the Contents and Formats of Information Disclosure by Companies Offering Securities to the Public No. 3 - Contents and Formats of Interim Reports (Amended in 2017) 《公開發行證券的公司信息披露內容與格式準則第3號-半年度報告的內容與格式（2017年修訂）》),the SSE Listing Rules and the Stock Exchange Listing Rules. In addition, this interim report has been simultaneously published in Mainland China and Hong Kong. This report has been prepared in Chinese and English. Should there be any discrepancies between the Chinese and English versions, the Chinese version shall prevail.

CONTENTS

I.	Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . 2
II.	Company Profile and Key Financial Indicators	. . . . . . . . . 6
III.	Business Overview . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . 10
IV.	Discussion and Analysis of Operations . . . . . .	. . . . . . . . . 15
V.	Significant Events . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . 32
VI.	Changes in Shares and
	Particulars of Shareholders . . . . . . . . . . . . . .	. . . . . . . . . 46
VII.	Preference Shares . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . 52.
VIII.	Directors, Supervisors and
	Senior Management . . . . . . . . . . . . . . . . . . .	. . . . . . . . . 53
IX.	Corporate Bonds . . . . . . . . . . . . . . . . . . .	. . . . . . . . . .56. . .
X.	Financial Report . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . 57
XI.	Documents Available for Inspection . . . . . .	. . . . . . . 192. . . .

1

I.  DEFINITIONS

In this report, the following expressions shall, unless the context otherwise requires, have the following meanings:

Common words

The Company or Dynagreen	Dynagreen Environmental Protection Group Co.., Ltd..
The Group	Dynagreen Environmental Protection Group Co.., Ltd.. and its subsidiaries
BSAM	Beijing State-owned Assets Management Co.., Ltd..
Dynagreen Investment	Dynagreen Investment Holding Company Limited (綠色動力投資控股有
	限公司) (formerly known as Blue-ocean Environment Investment Holding
	Company Limited (藍洋環保投資控股有限公司))
Changzhou Company	Changzhou Dynagreen Environmental and Thermoelectric Co.., Ltd.. (常州綠色
	動力環保熱電有限公司)
Haining Company	Haining Dynagreen Renewable Energy Co.., Ltd.. (海寧綠色動力再生能源有限
	公司)
Taizhou Company	Taizhou Dynagreen Renewable Energy Co.., Ltd.. (泰州綠色動力再生能源有限
	公司)
Wuhan Company	Wuhan Dynagreen Renewable Energy Co.., Ltd.. (武漢綠色動力再生能源有限
	公司)
Pingyang Company	Pingyang Dynagreen Renewable Energy Co.., Ltd.. (平陽綠色動力再生能源有
	限公司)
Yongjia Company	Yongjia Dynagreen Renewable Energy Co.., Ltd.. (永嘉綠色動力再生能源有限
	公司)
Rushan Company	Rushan Dynagreen Renewable Energy Co.., Ltd.. (乳山綠色動力再生能源有限
	公司)
Anshun Company	Anshun Dynagreen Renewable Energy Co.., Ltd.. (安順綠色動力再生能源有限
	公司)
Huizhou Company	Huizhou Dynagreen Environment Co.., Ltd.. (惠州綠色動力環保有限公司)
Jizhou Company	Tianjin Dynagreen Renewable Energy Co.., Ltd.. (天津綠色動力再生能源有限公
	司)
Jurong Company	Jurong Dynagreen Renewable Energy Co.., Ltd.. (句容綠色動力再生能源有限
	公司)
Ninghe Company	Tianjin Dynagreen Environmental Energy Co.., Ltd.. (天津綠動環保能源有限公
	司)
Bengbu Company	Bengbu Dynagreen Renewable Energy Co.., Ltd.. (蚌埠綠色動力再生能源有限
	公司)
Tongzhou Company	Beijing Dynagreen Environment Co.., Ltd.. (北京綠色動力環保有限公司)
Miyun Company	Beijing Dynagreen Renewable Energy Co.., Ltd.. (北京綠色動力再生能源有限
	公司)
Shantou Company	Shantou Dynagreen Renewable Energy Co.., Ltd.. (汕頭市綠色動力再生能源有
	限公司)
Zhangqiu Company	Zhangqiu Dynagreen Renewable Energy Co.., Ltd.. (章丘綠色動力再生能源有
	限公司)
Bobai Company	Bobai Dynagreen Renewable Energy Co.., Ltd.. (博白綠色動力再生能源有限公
	司)
Hong'an Company	Hong'an Dynagreen Renewable Energy Co.., Ltd.. (紅安綠色動力再生能源有限
	公司)
Yichun Company	Yichun Dynagreen Renewable Energy Co.., Ltd.. (宜春綠色動力再生能源有限
	公司)
Fengcheng Company	Fengcheng Dynagreen Environmental Protection Co.., Ltd.. (豐城綠色動力環保
	有限公司)

2	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

I.  DEFINITIONS (CONTINUED)

Huizhou Phase II Project Company	Huizhou Dynagreen Renewable Energy Co.., Ltd.. (惠州綠色動力再生能源有限
	公司)
Yongjia Phase II Project Company	Wenzhou Dynagreen Environmental Energy Co.., Ltd.. (溫州綠動環保能源有限
	公司)
Longhui Company	Longhui Dynagreen Renewable Energy Co.., Ltd.. (隆回綠色動力再生能源有限
	公司)
Pingyao Company	Pingyao Dynagreen Renewable Energy Co.., Ltd.. (平遙縣綠色動力再生能源有
	限公司)
Qingdao Company	Qingdao Dynagreen Renewable Energy Co.., Ltd.. (青島綠色動力再生能源有限
	公司)
Dongyang Fuli	Zhejiang Dongyang Fuli Construction Limited Company (浙江省東陽市富力建
	設有限公司)
Dengfeng Company	Dengfeng Dynagreen Renewable Energy Co.., Ltd.. (登封綠色動力再生能源有
	限公司)
Haining Expansion Project Company	Haining Dynagreen Haiyun Environmental Protection Energy Co.., Ltd.. (海寧綠
	動海雲環保能源有限公司)
Shishou Company	Shishou Dynagreen Renewable Energy Co.., Ltd.. (石首綠色動力再生能源有限
	公司)
Guangdong Promising	Guangdong Promising Environmental Protection Company Limited (廣東博海
	昕能環保有限公司)
Guangyuan Promising	Guangyuan Promising Environmental Protection Company Limited (廣元博海
	昕能環保有限公司)
Guangyuan Company	Guangyuan Boneng Renewable Energy Co.., Ltd.. (廣元博能再生能源有限公司)
Jiamusi Company	Jiamusi Bohai Environmental Protection and Electricity Company Limited (佳
	木斯博海環保電力有限公司)
Zhaoqing Company	Zhaoqing Boneng Renewable Energy Power Generation Co.., Ltd.. (肇慶市博
	能再生能源發電有限公司)
Shulan Company	Shulan Boneng Environmental Protection Company Limited (舒蘭市博能環保
	有限公司)
Zhangye Company	Zhangye Boneng Environmental Protection Company Limited (張掖博能環保
	有限公司)
Yongxing Company	Yongxing Boneng Environmental Energy Co.., Ltd.. (永興博能環保能源有限公
	司)
Dongguan Changneng	Dongguan Changneng Clean Energy and Greening Service Co.., Ltd.. (東莞市
	長能清潔能源綠化服務有限公司)
Jinsha Company	Guizhou Jinsha Green Energy Co.., Ltd.. (貴州金沙綠色能源有限公司)
Pingyang Phase II Project Company	Pingyang Dynagreen Environmental Energy Co.., Ltd.. (平陽綠動環保能源有限
	公司)
Jingxi Company	Baise Dynagreen Environmental Protection Co.., Ltd.. (百色綠動環保有限公司)
Enshi Company	Enshi Green Power Renewable Energy Co.., Ltd.. (恩施綠色動力再生能源有限
	公司)
Huludao Hazardous Waste Company	Lvyi (Huludao) Environmental Services Limited (綠益（葫蘆島）環境服務有限公
	司)
Huludao Waste-to-energy Company	Huludao Dynagreen Environment Co.., Ltd.. (葫蘆島綠動環保有限公司)
Laizhou Company	Laizhou Haikang Environmental Protection Energy Co.., Ltd..(萊州海康環保能
	源有限公司)
Shuozhou Company	Shuozhou Dynagreen Nanshan Environmental Energy Co.., Ltd.. (朔州綠動南
	山環境能源有限公司)

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

3

I.  DEFINITIONS (CONTINUED)

Changzhou Project	a municipal solid waste incineration thermoelectric project in Wujin District,
	Changzhou City, Jiangsu (江蘇常州市武進區生活垃圾焚燒熱電項目)
Wuhan Project	Xinghuo Waste-to-Energy Plant project in Wuhan, Hubei (湖北武漢星火垃圾焚
	燒發電廠項目)
Taizhou Project	a municipal solid waste-to-energy project in Taizhou City, Jiangsu (江蘇泰州
	市生活垃圾焚燒發電項目)
Pingyang Project	a solid waste-to-energy plant project in Pingyang, Zhejiang (浙江平陽生活垃
	圾焚燒發電廠項目)
Anshun Project	a waste-to-energy project in Anshun, Guizhou (貴州安順垃圾焚燒發電項目)
Haining Project	a waste incineration thermoelectric plant project in Haining City, Zhejiang (浙
	江海寧市垃圾焚燒熱電廠項目)
Yongjia Project	a waste-to-energy plant project in Yongjia, Zhejiang (浙江永嘉垃圾焚燒發電廠
	項目)
Rushan Project	a municipal solid waste-to-energy project in Rushan City, Shandong (山東乳
	山市生活垃圾焚燒發電項目)
Jizhou Project	a municipal solid waste-to-energy project in Jizhou District, Tianjin (天津市薊
	州區生活垃圾焚燒發電項目)
Huizhou Project	Lanzilong municipal solid waste-to-energy project in Huiyang District,
	Huizhou City, Guangdong (廣東惠州市惠陽區欖子壟生活垃圾焚燒發電項目)
Jurong Project	a municipal solid waste-to-energy project in Jurong City, Jiangsu (江蘇句容市
	生活垃圾焚燒發電項目)
Bengbu Project	a municipal solid waste-to-energy project in Bengbu City, Anhui (安徽蚌埠市
	生活垃圾焚燒發電廠項目)
Tongzhou Project	a renewable energy power plant in Tongzhou District, Beijing (北京市通州區
	再生能源發電廠)
Ninghe Straw Project	a straw incineration power generation project in Ninghe District, Tianjin (天津
	寧河區秸稈焚燒發電項目)
Ninghe Biomass Project	a biomass power generation project in Ninghe District, Tianjin (天津寧河區生
	物質發電項目)
Miyun Project	a construction project of an integrated waste treatment centre in Miyun
	County, Beijing (北京密雲縣垃圾綜合處理中心工程)
Guangyuan Project	a municipal solid waste-to-energy project in Guangyuan City, Sichuan (四川
	廣元市生活垃圾焚燒發電項目)
Jiamusi Project	a municipal waste-to-energy BOT project in Jiamusi City, Heilongjiang (黑龍
	江佳木斯市城市生活垃圾焚燒發電 BOT 項目)
Sihui Project	an environmental energy thermal power plant BOT project in Sihui,
	Guangdong (廣東四會環保能源熱力發電廠 BOT 項目)
Shantou Project	a municipal waste-to-energy plant in Chaoyang District, Shantou City,
	Guangdong (廣東汕頭市潮陽區生活垃圾焚燒發電廠)
Zhangqiu Project	a municipal waste-to-energy plant in Zhangqiu City, Jinan City, Shandong (山
	東濟南市章丘區生活垃圾焚燒發電廠)
Bobai Project	a municipal waste-to-energy project in Bobai County, Guangxi (廣西博白縣生
	活垃圾焚燒發電項目)
Hong'an Project	a municipal waste-to-energy project in Hong'an County, Hubei (湖北紅安縣生
	活垃圾焚燒發電項目)
Yichun Project	a municipal waste-to-energy PPP project in Yichun City, Jiangxi (江西宜春市
	生活垃圾焚燒發電PPP項目)
Fengcheng Project	a municipal waste-to-energy PPP project in Fengcheng City, Jiangxi (江西豐
	城市生活垃圾焚燒發電 PPP 項目)

4	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

I.  DEFINITIONS (CONTINUED)

Huizhou Phase II Project	phase II of a municipal waste-to-energy PPP project in Huiyang Environmental
	Park (惠陽環境園), Guangdong (廣東惠陽環境園生活垃圾焚燒二期 PPP 項目)
Dengfeng Project	a municipal waste-to-energy BOT project in Dengfeng City, Henan (河南登封
	市生活垃圾焚燒發電 BOT 項目)
Haining Expansion Project	a municipal waste-to-energy plant expansion project in Haining City, Zhejiang
	(浙江海寧市生活垃圾焚燒發電廠擴建項目)
Shishou Project	a municipal waste-to-energy project in Shishou City, Hubei (湖北石首市生活
	垃圾焚燒發電項目)
Yongjia Phase II Project	a municipal waste-to-energy plant upgrading and reconstruction project in
	Yongjia County, Zhejiang (浙江永嘉縣垃圾焚燒發電廠改造提升工程項目)
Pingyang Phase II Project	phase II of waste-to-energy power plant PPP project in Pingyang County,
	Zhejiang (浙江省平陽縣垃圾焚燒發電廠二期擴建 PPP 項目)
Jingxi Project	a municipal waste-to-energy project in Jingxi, Guangxi (廣西靖西市生活垃圾
	焚燒發電項目)
Jinsha Project	a municipal waste-to-energy project in Jinsha County, Guizhou (貴州省金沙縣
	生活垃圾焚燒發電項目)
Enshi Project	a municipal solid waste-to-energy project in Enshi, Hubei (湖北恩施城市生活
	垃圾焚燒發電項目)
Huludao Hazardous Waste Project	Liaoning Huludao Industrial Waste Treatment and Disposal Center project (遼
	寧葫蘆島工業廢物處理處置中心項目)
Huludao Waste-to-energy Project	a municipal waste-to-energy project of Huludao East Waste-to-Energy Power
	Plant in Liaoning (遼寧葫蘆島東部垃圾焚燒發電綜合處理廠生活垃圾焚燒發電
	項目)
Laizhou Project	a domestic waste comprehensive treatment PPP project in Laizhou City,
	Shandong (山東萊州市生活垃圾綜合處理 PPP 項目)
Shuozhou Project	the concession project of the Nanshan enviro-energy project (including the
	municipal solid waste-to-energy project and the kitchen waste treatment
	project) in Shuozhou, Shanxi Province (山西朔州南山環境能源項目（生活垃圾
	焚燒發電項目和餐廚垃圾處理項目）特許經營項目)
Zhangqiu Phase II Project	the Municipal Solid Waste-to-Energy Project Phase II and the Venous
	Industrial Park Project in Zhangqiu District, Ji'nan City, Shandong Province (山
	東濟南市章丘區生活垃圾焚燒發電項目二期工程暨靜脈產業園項目)
The Reporting Period	1 January 2020 to 30 June 2020
The end of the Reporting Period	30 June 2020
RMB or RMB'0,000	Renminbi or Renminbi ten thousand
PRC or Mainland China	the People's Republic of China, for the purposes of this report, excluding
	Hong Kong, the Macau Special Administrative Region and Taiwan region
Company Law	the Company Law of the PRC
SFO	the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
	Kong)
Stock Exchange	The Stock Exchange of Hong Kong Limited
Stock Exchange Listing Rules	The Rules governing the Listing of Securities on The Stock Exchange of Hong
	Kong Limited
SSE	The Shanghai Stock Exchange
SSE Listing Rules	The Rules governing the Listing of Stocks on the Shanghai Stock Exchange
PRC Accounting Standards	the China Accounting Standards for Business Enterprises formulated and
	promulgated by the Ministry of Finance of the PRC
BOT	Build-Operate-Transfer
Installation, Erection and Networking	Municipal waste-to-energy plants are required to install online automatic flue
	gas monitoring equipment; erect electronic display screens at the entrance
	to the plants or at a prominent location that is convenient for the public to
	view for disclosure of various index data to the public; and networking the
	automatic flue gas monitoring system with the environmental protection
	department to accept real-time monitoring

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

5

II.  COMPANY PROFILE AND KEY FINANCIAL INDICATORS

1. Corporate profile

Company name in Chinese	綠色動力環保集團股份有限公司
Short company name in Chinese	綠色動力
Company name in English	Dynagreen Environmental Protection Group Co.., Ltd..
Short Company name in English	Dynagreen
Legal representative of the Company	Zhi Jun
II. Contact persons and contact methods
			Securities Affairs
	Secretary to the Board	Company secretary	Representative
Name	Zhu Shuguang	Yuen Wing Yan, Winnie	Li Jian
Correspondence	2nd Floor, Jiuzhou	15/F,	2nd Floor,
address	Electronic Building,	International Trade Tower,	Jiuzhou Electronic Building,
	Keji South 12th Street,	348 Kwun Tong Road,	Keji South 12th Street,
	Nanshan District, Shenzhen Hong Kong	Nanshan District,
			Shenzhen
Telephone	0755-33631280-8010	-	0755-33631280-8010
Facsimile	0755-33631220	-	0755-33631220
E-mail address	ir@dynagreen..com..cn	-	ir@dynagreen..com..cn
III. Change in basic information
Registered office of the Company	2nd Floor, Jiuzhou Electronic Building, Keji South 12th Street,
		Nanshan District, Shenzhen
Postal code of registered	518057
office of the Company
Principal place of business	2nd Floor, Jiuzhou Electronic Building, Keji South 12th Street,
in the Mainland China	Nanshan District, Shenzhen
Postal code of principal place of	518057
business of the Company
Principal place of business in Hong Kong	1st Floor, Xiu Ping Commercial Building, 104 Jervois Street, Hong Kong
Company's website		http://www..dynagreen..com..cn/
E-mail address		ir@dynagreen..com..cn
Index to changes during the	During the Reporting Period, there was no change in basic information of
Reporting Period		the Company

6	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

II.  COMPANY PROFILE AND KEY FINANCIAL INDICATORS (CONTINUED)

IV. Changes in information disclosure and place for inspection

Designated newspapers for information disclosure

Website designated by the CSRC for publishing the interim report

Website designated by Hong Kong Stock Exchange for publishing the interim report

Place for inspection of the interim report

Index to changes during the Reporting Period

China Securities Journal, Shanghai Securities News, Securities Times and Securities Daily

www..sse..com..cn

www..hkexnews..hk

2nd Floor, Jiuzhou Electronic Building, Keji South 12th Street, Nanshan District, Shenzhen

No change during the Reporting Period

V. Basic information of the Company's shares

	Stock exchanges on			Stock abbreviation
Class of shares	which the shares are listed	Stock abbreviation	Stock code	before the change
A Shares	Shanghai Stock Exchange	綠色動力	601330
H Shares	Hong Kong Stock Exchange	DYNAGREEN ENV	1330

VI. Other relevant information

• Applicable  □ Not applicable

1. Auditors engaged by the Company

KPMG Huazhen LLP

2. Legal advisers engaged by the Company

As to Hong Kong law: Morrison & Foerster

As to the PRC law: Beijing Kangda Law Firm

3. Share registrar of the Company

Share registrar of A shares of the Company: China Securities Depository and Clearing Corporation Limited

Shanghai Branch (Address: 3/F, China Insurance Building, 166 Lujiazui East Road, Pudong New District, Shanghai, China)

Share registrar of H shares of the Company: Tricor Investor Services Limited (Address: Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong)

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

7

II.  COMPANY PROFILE AND KEY FINANCIAL INDICATORS (CONTINUED)

VII. Major accounting data and financial indicators

(I) Major accounting data

			Unit: RMB
			Increase/decrease
			for the Reporting
	The Reporting		Period over the
	Period (January	Corresponding	corresponding
Major accounting data	to June)	period last year	period last year (%)
Operating income	1,011,128,651..22	795,270,932..19	27..14
Net profit attributable to shareholders of
the Company	248,732,696..26	217,163,283..10	14..54
Net profit excluding extraordinary gain
and loss attributable to the shareholders of
the Company	237,602,136..47	194,334,535..06	22..26
Net cash flows from operating activities	-29,258,448..69	-125,467,057..29	N/A
			Increase/decrease
			for the end of the
	As at the end of		Reporting Period
	the Reporting	As at the end	over the end of
	Period	of last year	last year (%)
Net assets attributable to shareholders of
the Company	3,427,505,032..45	3,296,228,917..35	3..98
Total assets	15,177,101,759..05	13,670,787,404..47	11..02

8	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

II.  COMPANY PROFILE AND KEY FINANCIAL INDICATORS (CONTINUED)

(II) Key financial indicators

			Increase/decrease
			for the Reporting
	The Reporting		Period over the
	Period (January	Corresponding	corresponding
Key financial indicators	to June)	period last year	period last year (%)
Basic earnings per share (RMB/share)	0..21	0..19	10..53
Diluted earnings per share (RMB/share)	0..21	0..19	10..53
Basic earnings per share excluding	0..20	0..17	23..53
extraordinary gain and loss (RMB/share)
Weighted average return on net assets (%)	7..27	6..99	Increased by 0..28
			percentage point
Weighted average return on net assets	6..95	6..26	Increased by 0..69
excluding extraordinary gain and loss (%)			percentage point

Explanations on the major accounting data and financial indicators of the Company

• Applicable  ✓ Not applicable

VIII. Accounting data differences between domestic and overseas accounting standards

• Applicable  ✓ Not applicable

IX. Extraordinary gains and losses items and amounts

✓ Applicable  □ Not applicable
		Unit: RMB
		Note
Extraordinary gains and losses items	Amount	(if applicable)
Gains and losses from disposal of non-current assets	40,238..36
Government grants recognised through profit or loss (except for
government grants which closely related to Company business
that are fixed or quantified based on the national standard)	11,977,233..31
Other non-operating income and expenses besides items above	76,408..59
Effects on non-controlling shareholders	-189,299..66
Effects on income tax	-774,020..81
Total	11,130,559..79

X. Others

□ Applicable  ✓ Not applicable

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

9

III.  BUSINESS OVERVIEW

1. Principal Operations, Business Model and Industry Information of the Company During the Reporting Period
   1. Principal operations of the Company

The Company is one of the earliest enterprises to conduct municipal waste-to-energy business in the PRC, and is mainly engaged in the investment, construction, operation, maintenance and technical consulting business of municipal waste-to-energy plants under BOT and other concessions.. Focusing on the vast market space of the economically developed Yangtze River Delta, Pearl River Delta and Bohai Economic Rim, the Company has extended its business network to the central and western regions such as Anhui, Hubei, Guizhou, Shanxi, Guangxi, Jiangxi, Hunan, Shaanxi, Henan and Sichuan, preliminary forming a market layout based on the Yangtze River Delta, Pearl River Delta and Bohai Rim and spanning across the country.. As at 30 June 2020, in respect of the municipal waste-to-energy sector, the Company had 26 projects under operation, 4 projects under construction and 16 projects under preparation.. The waste treatment capacity of the projects under operation reached 25,710 tons/day and the installed capacity was 508MW, placing the Company in a leading position in the industry in terms of the number of projects and waste treatment capacity..

2. Major business model

The Company mainly adopts the BOT model to operate its municipal waste-to-energy business as follows: The government department responsible for waste disposal selects a service provider to construct and operate the waste-to-energy plant under the BOT model through tenders or other means.. After the Company is awarded the project, the Company enters into a concession agreement with the relevant local government department and establishes a project company to conduct business.. According to the concession agreement entered into with the relevant local government department, the project company is responsible for raising funds to construct and operate the entire waste-to-energy plant.. The concession period is usually from 25 to 30 years.. The relevant government department pays the project company a waste treatment fee at the agreed price, and the project company sells the electricity, steam or hot water generated during the waste incineration process.. Upon the expiration of the concession, the Company has to transfer the relevant infrastructure to the concession grantor..

The upstream industries of the Company include construction enterprises, installation companies, waste treatment and power generation equipment (such as incinerators, smog and gas treatment systems, turbine generators and waste heat boilers) suppliers, and the Company selects suppliers through tenders.. The downstream industries mainly include local government departments and power grid companies.. The Company provides waste incineration treatment services to local governments to receive waste treatment fees and provides electricity to power grid companies to receive electricity tariffs..

10	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

III.  BUSINESS OVERVIEW (CONTINUED)

3. Main processes and technologies

The specific process of waste incineration power plant is illustrated in the following diagram:

Specific Waste-to-energy Process

Power grid

Atmosphere

Electricity

Municipal

Turbine

Chimney

generators

solid waste

Smog

Steam

Activated carbon

Weighbridge

Waste dump

Incinerator

Waste

Reactor

Bag filtering

heat boiler

Leachate

Slag

Ammonium

Comprehensive

hydroxide

Leachates

Ash

processing station

utilization

solidifying

Reuse or

municipal sewerage

Landfill

The core equipment of the waste incineration power generation system is incinerator.. The Company mainly uses the self-developedthree-drive expeller grate waste incinerator.. The incinerator has a unique integrated three-stage design.. Its drying and burning configuration are equipped with independent driving mechanism.. It can flexibly adjust the running speed of each section according to the combustion condition, which can better control the distribution of the fire bed and achieve lower clinker ignition loss..

4. Information of municipal waste-to-energy industry

With the steady population growth, continuous advancement of urbanisation and economic development in the PRC, the volume of municipal waste generated in the PRC continues to rise, and the demand for treatment is growing.. From 2008 to 2018, the volume of municipal waste increased from 154..38 million tons to 228..018 million tons in the PRC, with a compound growth rate of 3..98% (data source: China Statistical Yearbook).. Detoxification waste treatment is mainly divided into three ways: incineration, landfill and composting.. Incineration has the advantages of significant reduction in quantity, less space required and relatively small impact on the environment, and is the fastest growing segment.. From 2008 to 2018, the number of municipal waste-to-energy plants increased from 74 to 331 in the PRC, which increased by 347..30%..The daily processing capacity increased from 51,600 tons to 364,600 tons, with a compound growth rate of 21..59%.. The actual annual processing capacity increased from 15..697 million tons to 101..849 million tons, with a compound growth rate of 20..56%.. Compared with the developed countries, the percentage of waste-to-energy processing capability in China is still relative low, which was approximately 45% as of 2018.. According to the national "13th Five-Year" plan, the percentage should rise from 31% in 2015 to over 50% in 2020, in respect of the proportion of municipal solid waste processed through incineration to such waste under detoxification treatment nationwide.. As for Eastern China, such percentage should exceed 60%.. As for municipalities, the five cities with independent planning status and provincial capitals, efforts should be made to achieve "zero" land filling of raw garbage..

On 31 July 2020, the National Development and Reform Commission, the Ministry of Housing and Urban- Rural Development, and the Ministry of Ecology and Environment jointly issued the Implementation Plan for Strengthening Weaknesses of Municipal Solid Waste Sorting and Treatment Facilities, stipulating that in areas where the daily domestic waste removal volume is more than 300 tons, it is necessary to accelerate the development of waste treatment methods dominated by incineration, and moderately advance the construction of incineration facilities that are compatible with the daily domestic waste removal volume to basically achieve "zero landfilling" of primary domestic waste by 2023..

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

11

III.  BUSINESS OVERVIEW (CONTINUED)

The municipal waste-to-energy industry is characterized by policy encouragement, regional monopoly, capital intensiveness, and insignificant seasonal and periodic fluctuations.. Details are as follows:

1. 1. In recent years, with the continuous advancement of China's industrialization and urbanization, the environmental problems in our country have become increasingly serious.. The State has paid unprecedented attention to the construction of ecological civilization.. Energy-saving and environmental protection industry, including waste treatment, is the top of the seven strategic emerging industries of the PRC.. In the context of a small per capita land area in the PRC, waste-to-energy is an important means to achieve the "reduction, recycling, and harmless treatment" of waste and improve the ecological environment.. Due to the large initial investment and high operating costs of waste-to-energy business, the State has introduced preferential policies in various aspects such as on-grid tariff and tax to promote the rapid development of the waste-to-energy industry, e..g.. implementation of the national unified waste-to-energy benchmarking tariff of RMB0..65 per kWh for the part that does not exceed 280 kWh per ton of municipal waste on-grid electricity; eligible waste-to-energy projects will be eligible for a tax exemption for the first year to the third year, and a 50% reduction in CIT for the fourth year to the sixth year starting from the year in which the projects first generate operating income; VAT on tariff revenue is subject to 100% refund and VAT on waste treatment fees is subject to 70% refund..
   2. The waste-to-energy projects in the PRC usually adopt the concession model, and the concession period is generally from 25 to 30 years.. Under this model, the relevant government departments grant concession rights to investors or operators of waste-to-energy plants, and the grantees of concession rights enjoy the exclusive right to treat municipal waste in a certain area during the concession period..
   3. The waste-to-energy industry is capital intensive.. A large initial investment is required for the waste- to-energy project.. The capital investment for a waste-to-energy plant with a daily treatment capacity of 1,000 tons is generally RMB400 million to RMB600 million.. At the same time, the payback period of waste-to-energy projects is relatively long, generally 8-12 years..
   4. The raw materials of waste-to-energy plants are municipal waste, which is directly related to the local population, and of which the production volume is relatively stable and subject to insignificant seasonal and periodic fluctuations..
2. Material Changes of Major Assets of the Company During the Reporting Period
3. • Applicable  □ Not applicable

As at the end of the Reporting Period, the accounts receivable of the Company amounted to RMB566,333,766..23, representing an increase of 25..08% compared to the end of the previous year, mainly due to the addition of operating projects such as Phase II of Anshun Project, Hongan Project, Yichun Project, Huizhou Phase II Project and Haining Expansion Project during the period and the increase in income and extension in settlement period of accounts receivable of some project companies; the contract assets amounted to RMB513,397,453..28, representing an increase of 29..79% compared to the end of the previous year, mainly due to the addition of operating projects such as Phase II of Anshun Project and Haining Expansion Project during the period, and some projects under operation which have not been included in the directory of national renewable energy subsidies, and the increase in the accumulated balance of receivables from national renewable energy subsidies..

In which, overseas assets amounted to RMB1,501,677..46 (Unit: RMB), accounting for 0..01% of total assets..

12	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

III.  BUSINESS OVERVIEW (CONTINUED)

1. Analysis of Core Competitiveness During the Reporting Period
   ✓ Applicable  □ Not applicable

During the Reporting Period, there was no material change in the core competitiveness of the Company..

1. Focused market layout spanning across the whole country

Since its establishment, the Company has adopted a proactive strategy in market development and strives to develop various regional markets.. Its projects are distributed in an extensive geographical area, with a market network covering 20 provinces/municipalities/autonomous regions.. Focusing on the vast market space of the economically developed Yangtze River Delta, Pearl River Delta and Bohai Economic Rim, the Company has extended its business network to the central and western regions such as Anhui, Hubei, Guizhou, Shanxi, Guangxi, Jiangxi, Hunan, Shaanxi, Henan and Sichuan, preliminary forming a market layout based on the Yangtze River Delta, Pearl River Delta and Bohai Rim and spanning across the country..

2. Extensive industry experience

The Company is among the first companies to explore industrial applications for waste treatment in the PRC, and is also one of the earliest enterprises to focus on upgrading and further developing advanced international waste-to-energy technologies in the PRC.. Since its establishment in 2000, the Company has accumulated extensive experience in project investment, construction and operation management.. It has been rated as the "Top 10 Most Influential Solid Waste Enterprises" for ten consecutive years.. More than two decades of industry experience builds up the brand of the Company and will help the Company seize the development opportunities in the industry and achieve its strategic development goals..

3. Leading expertise

The "multiple drive expeller grate waste incinerator" technology independently developed by the Company is a leading incineration technology in the industry and was granted an invention patent by the State.. The technology is compatible with the characteristics of the municipal waste in the PRC with an edge in performance, was selected by the Ministry of Housing and Urban-Rural Development (住建部) as a core technology to promote for use during the "11th Five-Year Plan" period, and was successfully incorporated in the 2019 Directory of Key Environmental Protection Practical Technologies and Demonstration Projects (《2019年重點環境保護實用技術及示範工程名錄》) by China Association of Environmental Protection Industry (中國環境保護產業協會).. The Changzhou Project was recognised by China Association of Environmental Protection Industry (中國環境保護產業協會) as a "National Model Project for Use of Environmental Protection Technologies" (使用環保技術的國家模範項目) in 2013.. The Huizhou Project was awarded the "Quality Chinese Project for Electricity Engineering Award" (中國電力優質工程獎) and the "National Quality Project Award" (國家優質工程獎) in 2017.. Tongzhou Project was awarded the "Quality Chinese Project for Electricity Engineering Award" (中國電力優質工程獎) in 2020.. "A multiple drive expeller grate waste incinerator with an online warning and control system of dioxin" as independently developed by the Company was awarded the second prize for technical progress for 2019 by China Environmental Protection Association.. With its professional technologies, the Company is able to provide more premium environmental services for its customers and enhance its market position..

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

13

III.  BUSINESS OVERVIEW (CONTINUED)

4. Experienced management team

The management team of the Company has been engaged in business management, market development, technology development and construction and operation of waste-to-energy plants over the years.. The general manager of the Company, Mr.. Qiao Dewei, was recognised as one of the "Top 100 Industry Leaders in Shenzhen", proving his social influence and charisma, and the management team under his leadership has nearly 20 years of experience in cooperation and in-depth understanding of the industry.. Under the guidance of the management team, the project construction and operation team can adopt targeted strategies for the changes in the waste treatment technology and management and operation of waste-to- energy plants in a timely manner, while the marketing team can actively develop potential regional markets according to the future development planning of the Company.. Such an experienced team of the Company helps to enhance the operating efficiency and warrants the quality of the projects..

14	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS

1. Discussion and Analysis of Operations

Industry overview

The year 2020 is the last year for China to complete the building of a moderately prosperous society in an all- round way and realization of the "13th Five-Year" plan.. While the entire country was preventing and controlling the COVID-19 epidemic, constant effects were further exerted on environmental pollution prevention and control.. We continued to fight our battle for the blue sky, clear water and clean soil, in order to achieve the stage goals and tasks of pollution prevention and control.. In order to build a modern environmental governance system, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the Guiding Opinions on Building a Modern Environmental Governance System (《關於構建現代環 境治理體系的指導意見》) in March 2020, which clarified the rights and responsibilities of various entities including governments, enterprises, and the public, aiming to form a good pattern for the whole society to jointly promote environmental governance, and provide a strong system guarantee for promoting the fundamental improvement of the ecological environment and building ecological civilization and a beautiful China..

In January 2020, the Ministry of Finance, the National Development and Reform Commission, and the National Energy Administration jointly issued the Opinions on Promoting the Healthy Development of Non-hydro Renewable Generation (《關於促進非水可再生能源發電健康發展的若干意見》). . In June, the Ministry of Finance issued the policy interpretations which stated that the scale of newly added subsidized projects shall be reasonably determined according to the principle of determining expenditure based on revenue, to ensure no arrearages in subsidy for new projects; policy consistency and reasonable return for existing subsidized projects shall be fully guaranteed; it's required to increase income and reduce expenditure, and adopt various methods to increase subsidy income, reduce illegal subsidy demand, and ease the subsidy pressure of existing subsidized projects; all eligible existing subsidized projects shall be included in the list of subsidies; departments shall coordinate with each other to enhance policy synergy, and different renewable energy power generation projects shall be subject to classified management, which pointed out the direction for the healthy and stable development of non-hydro renewable generation including municipal waste-to-energy industry..

The municipal wastes detoxification treatment and resource utilization are the key aspects of the battle for clean soil, and municipal waste-to-energy is a treatment method encouraged to be adopted by the policies.. The year 2020 is the last year for implementation of the "13th Five-Year Plan" for National Construction Plan for Municipal Waste Detoxification Treatment Facilities (《「十三五」全國城鎮生活垃圾無害化處理設施建設規劃》).. According to the "13th Five-Year" plan, by the end of 2020, the scale of municipal solid waste incineration treatment will reach 591,400 tons per day, and the treatment scale will account for 54%; municipalities, city with independent planning status, and provincial capitals (built-up areas) meeting conditions shall achieve "zero land filling" for raw garbage; the municipal solid waste incineration treatment capacity shall accounts for more than 50% of the total detoxification treatment capacity.. As for Eastern China, such percentage should exceed 60%.. Therefore, the policies for municipal waste-energy industry remained stable.. The treatment capacity of the industry continued to grow with further release of market potential..

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

15

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

Business review

In the first half of 2020, in the face of the sudden outbreak of the COVID-19 epidemic, Dynagreen fully demonstrated its social responsibility as state-owned enterprise and public company.. The entire group made deployment quickly.. While strictly implementing disinfection for plants and providing health protection for employees, full efforts were made to dispose of domestic waste for each project at the critical moment of epidemic prevention and control.. In particular, Wuhan Company, which is at the center of the epidemic, proactively cooperated with local emergency institutions in co-processing medical waste and made due contributions to winning the battle against the epidemic in Wuhan.. The Company proactively overcame the negative impact of COVID-19 and achieved remarkable results in production and operation.. The projects under operation had not only "maintained stable operation and complied with emission standards", but also had delivered the new highs in volume of waste treatment and on-grid electricity.. The projects under construction were on track.. Haining Expansion Project, Hongan Project, Yichun Project, Fengcheng Project and Huizhou Phase II Project began to supply electricity to the grid, thus the production capabilities went up to a new level.. Excellent results had been achieved in project expansion again and there were three newly added municipal waste-to-energy projects.. New breakthroughs were made in technology research and development, resulting in further improvement in core competitiveness.. The progress of non-public issuance of A shares continued to advance steadily.. The Company received feedback from the CSRC in March and formally replied in May.. The Company adjusted the plan on non-public issuance of A shares in accordance with the new refinancing regulations, and the adjusted plan was considered and approved at the general meeting at the end of June..

16	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

In the first half of 2020, the Company achieved revenue of RMB1,011,128,651..22, representing an increase of 27..14% as compared to the corresponding period last year, and a net profit attributable to shareholders of the Company of RMB248,732,696..26, representing an increase of 14..54% as compared to the corresponding period last year.. As at 30 June 2020, the total assets and total equity attributable to shareholders of the Company amounted to RMB15,177,101,759..05 and RMB3,427,505,032..45, respectively.. Details are as follows:

1. Projects under operation performed steadily hitting new highs in volume of waste treatment and on-grid electricity

In the first half of 2020, the Company treated 3..9793 million tons of municipal waste, representing a year- on-year increase of 17%, treated 163,500 tons of straws, and generated on-grid electricity (including straw power generation) of 1,226 million kWh, representing a year-on-year increase of 27..58%.. The Company constantly attaches great importance to operation management.. In the first half of 2020, the Company conducted its operation under the concepts of being "safe, environmental friendly, civilized and effective" to strengthen security and environment protection management and deepen refined management, maintaining stable production and meeting emission standards.. Tongzhou project won the "2020 Quality Chinese Project for Electricity Engineering Award (中國電力優質工程獎)" and became the Company's second project which was awarded this honor..

Major operating data of the Company in each region in the first half of 2020
Region	Item	First half of 2020
East China	Waste input volume ('0,000 tons)	170.52
	Electricity generation volume ('0,000 kWh)	60,347.14
	On-grid electricity volume ('0,000 kWh)	50,415.43
North China	Waste and straw input volume ('0,000 tons)	84.4
	Electricity generation volume ('0,000 kWh)	32,577.10
	On-grid electricity volume ('0,000 kWh)	26,453.88
South China	Waste input volume ('0,000 tons)	79.73
	Electricity generation volume ('0,000 kWh)	30,698.78
	On-grid electricity volume ('0,000 kWh)	25,730.65
Central China	Waste input volume ('0,000 tons)	26.93
	Electricity generation volume ('0,000 kWh)	8,919.26
	On-grid electricity volume ('0,000 kWh)	7,423.75
Southwest China	Waste input volume ('0,000 tons)	31.25
	Electricity generation volume ('0,000 kWh)	10,714.53
	On-grid electricity volume ('0,000 kWh)	8,940.39
Northeast China	Waste input volume ('0,000 tons)	21.45
	Electricity generation volume ('0,000 kWh)	4,817.96
	On-grid electricity volume ('0,000 kWh)	3,640.47

Note: The above data includes the production data of Fengcheng Company, a joint venture..

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

17

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

2. The projects under construction successfully conducted and five new projects were completed and commenced operation

In the first half of 2020, the Company endeavoured to overcome the impact of the COVID-19 on the construction period and the projects under construction of the Company were conducted smoothly.. Phase

1. of Anshun Project, Haining Expansion Project, Hongan Project, Yichun Project, Fengcheng Project and State I of Huizhou Phase II Project began to supply electricity to the grid successively with newly added production capacity of 6,100 ton/day.. As of the end of June, 40%, 40% and 30% of construction works were completed in Yongjia Phase II Project, Pingyang Project and Shishou Project, respectively.. The construction of Jinsha Project and the Stage II of Huizhou Phase II Project officially commenced.. 70% of construction works were completed for the landfill of Huludao Hazardous Waste Project..

Major projects and works under construction in the first half of 2020

		Design
		treatment
		capacity
No.	Project	(tons/day)	Status
1	Haining Expansion Project	1,500	Put into project in April 2020
2	Fengcheng Project	800	Put into production in May 2020
3	Stage I of Huizhou Phase II Project	1,700	Put into production in May 2020
4	Yichun Project	1,000	Put into production in May 2020
5	Hongan Project	700	Put into production in May 2020
6	Yongjia Phase II Project	750	In construction
7	Pingyang Phase II Project	750	In construction
8	Shishou Project	700	In construction
9	Jinsha Project	800	In construction
10	Stage II of Huizhou Phase II Project	1,700	In construction
11	Huludao Hazardous Waste Project	-	In construction

18	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

3. Reaching new horizons in market development with three newly additional municipal waste-to-energy projects

In 2020, the Company is maintaining efforts for project development in both new project development and project merger and acquisition.. The Company successively entered into two concession agreements for Shuozhou Project and Zhangqiu Phase II Project, and succeeded in acquiring Laizhou Project and bidding for the PPP project of the harmless treatment of sludge, kitchen waste and excrement for Huiyang District, Huizhou City, enriching the project reserve..

Newly additional municipal waste-to-energy projects in the first half of 2020

		Total treatment
		scale	Signing time of investment/
No.	Project	(tons/day)	concession agreement
1	Laizhou Project	1,500	April 2020
2	Shuozhou Project	800	May 2020
3	Zhangqiu Phase II Project	2,400	June 2020
4	PPP project of the harmless treatment of	600	July 2020
	sludge, kitchen waste and excrement
	for Huiyang District, Huizhou City

4. New breakthroughs in technology research and development and further improvement in core competitiveness

In 2020, the Company continued to research and develop large incinerators in line with the Company's trend towards large projects.. The 600-ton incinerator as developed independently by the Company completed trial operation and was in stable operation with good combustion conditions; the Company completed the processing and manufacturing and the final assembly test run of the 800-ton incinerator as developed independently by the Company, and the preliminary design of the 900-ton large incinerator.. With the 2 patents (including 1 invention patent) newly obtained in the first half of the year, as of the end of June 2020, the Group has obtained a total of 64 patents (including 14 invention patents and 50 utility model patents)..

BUSINESS OUTLOOK

On 31 July 2020, the National Development and Reform Commission, the Ministry of Housing and Urban- Rural Development, and the Ministry of Ecology and Environment jointly issued the Implementation Plan for Strengthening Weaknesses of Municipal Solid Waste Sorting and Treatment Facilities (the "Implementation Plan"), stipulating that it is necessary to vigorously improve the waste incineration capacity; in areas where the daily domestic waste removal volume is more than 300 tons, it is necessary to accelerate the development of waste treatment methods dominated by incineration, and moderately advance the construction of incineration facilities that are compatible with the daily domestic waste removal volume by 2023 to basically achieve "zero landfilling" of primary domestic waste.. Therefore, the waste incineration power generation industry in China will still be in a promising period of opportunity, and the fierce competition in the industry will also be maintained.. The Implementation Plan also stipulates that a classified collection and transportation system for domestic waste will be built in 46 key cities by 2023.. As the mandatory classification of domestic waste is implemented in more cities, more domestic waste incineration projects across the country will face the possible impact of classification..

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

19

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

Since the beginning of this year, new regulations concerning subsidies for national renewable energy have been promulgated successively.. On 20 January, the Ministry of Finance, the National Development and Reform Commission, and the National Energy Administration jointly issued the Administrative Measures for Additional Funds for Renewable Energy Tariff (《可再生能源電價附加資金管理辦法》), stipulating that after the measures are released, for the new renewable energy power generation projects that need to be subsidized, the Ministry of Finance will reasonably determine the total amount of subsidies for new renewable energy power generation projects supported by the subsidy funds in the current year based on the annual increase in subsidies, technological progress and industry development, etc.. The National Development and Reform Commission and the National Energy Administration will reasonably determine the newly installed capacity of various renewable energy power generation projects that require subsidies within the total annual new subsidies as determined by the Ministry of Finance according to the renewable energy development plan and technological progress, etc..; the existing renewable energy power generation projects that need to be subsidized before the issuance of the measures shall meet the requirements of the national energy authority and be included in the list of subsidized projects after being reviewed by the power grid company according to process.. The principle of determining expenditure based on revenue may restrict the future growth rate of the industry..

On 19 June, the Ministry of Finance and the Ministry of Ecology and Environment jointly issued the Notice on Reduction of Additional Subsidy Funds for Renewable Energy Tariff for Environmentally Illegal Waste-to-energy Projects (《關於核減環境違法垃圾焚燒發電項目可再生能源電價附加補助資金的通知》) which clarified that waste- to-energy projects could only be included in the scope of subsidy list after completion of "Installation, Erection and Networking".. After waste-to-energy projects disclose the automatic monitoring data to the public, the power grid enterprises can allocate subsidy funds and deduct the subsidy funds for the period when the automatic monitoring data is not disclosed to the public at settlement.. At the same time, it stipulates that if the waste-to- energy project included in the scope of subsidy is punished for violations of Articles 10 and 11 of the Regulations on the Management of Application of Automatic Monitoring Data for Municipal Solid Waste-to-Energy Plants (《生活垃圾焚燒發電廠自動監測數據應用管理規定》), the power grid enterprises shall reduce the corresponding amount of subsidy for the on-grid energy on the date when the furnace incinerator violates regulations.. The "Installation, Erection and Networking" and up-to-standard emissions as the conditions for the appropriation of additional subsidy funds for renewable energy tariff will put forward more stringent requirements on the overall standard operation of the industry..

The Company will take the mission of creating a better living environment, give full play to its advantages in brand, technology, talent team and financing channel, seize the opportunities of industry development, overcome new opportunities in the industry, continue to deepen the waste incineration power generation industry, and consolidate its leading position in the industry.. In addition, we will also strengthen technology research, development and innovation, optimize management of projects under construction, improve operational project management standards, improve internal management systems, and achieve high-quality sustainable development..

In the second half of 2020, the Company will continue to ensure the safe production of operating projects and up-to-standard emissions, to minimize the impact of the epidemic on the annual results, striving to complete the annual production targets; it will continue to speed up the project preparation and construction to ensure that 90%, 80% and 90% of construction works will be completed for Yongjia Phase II Project, Pingyang Phase II Project and Shishou Project by the end of the year, respectively; the scheduled construction tasks will be accomplished for Jinsha Project and Stage II of Huizhou Phase II Project; the construction of Dengfeng Project, Shuozhou Project and Laizhou Project will be commenced; we will strive to commence construction of Huludao Waste-to-energy Project in the year.. The non-public issuance of A shares will be steadily advanced to provide financial support for the Company's sustained and rapid development..

20	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

1. Major Operational Particulars During the Reporting Period
2. 1. Analysis of main businesses
      1 Analysis of changes in the relevant items in the financial statements

			Unit: RMB
		Amount for
	Amount for	the corresponding
Item	the current period	period last year	Change (%)
Operating income	1,011,128,651.22	795,270,932..19	27..14
Operating cost	436,329,282.57	369,381,701..88	18..12
Administrative expenses	59,689,417.95	55,188,466..26	8..16
Finance costs	197,855,721.26	151,796,172..26	30..34
Research and development
expenditure	2,304,519.88	4,591,001..76	-49..80
Net cash flow generated from
operating activities	-29,258,448.69	-125,467,057..29	N/A
Net cash flow generated from
investing activities	-778,874,139.80	-1,160,484,448..80	N/A
Net cash flow generated from
financing activities	1,046,847,441.85	1,196,976,022..87	-12..54

Explanation on changes in operating income:

Explanation on changes in operating cost: Explanation on changes in selling expenses: Explanation on changes in administrative

expenses:

Explanation on changes in finance costs: Explanation on changes in research and

development expenses:

Explanation on changes in net cash flow generated from operating activities:

Explanation on changes in net cash flow generated from investing activities:

Explanation on changes in net cash flow generated from financing activities:

Mainly due to the addition of operating projects including Hongan Project, Yichun Project, Huizhou Phase II Project, Haining Expansion Project and Sihui Project, and the commencement of operation of Shantou Project, Zhangqiu Project and Bobai Project in March, April and May of the last year, respectively .

Mainly due to the increase in operating projects N/A

Mainly due to the increase in operating projects

Mainly due to the increase in borrowing

Mainly due to changes in R&D staff

Mainly due to the increase in cash received for the sale of goods and provision of services

Mainly due to the delay in payment milestones as a result of the delay in progress of project caused by the delayed resumption of projects under construction as affected by the COVID-19 in February and March during the Reporting Period .

Mainly due to the full payment for 2019 profit distribution as at the end of the Reporting Period and increase in cash paid for payment of interests in the Reporting Period

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

21

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

1. 2 Others

   1. Detailed explanation of major changes in the composition or sources of the Company's profit
   2. • Applicable  ✓ Not Applicable
   3. Others
   4. • Applicable  ✓ Not Applicable
2. Explanation of major changes in profit due to non-main operations

1. □ Applicable  ✓ Not Applicable

2. Analysis of assets and liabilities

• Applicable  □ Not Applicable

1. Assets and liabilities

						Unit: RMB
		Percentage of		Percentage of	Change of
			amount as at
		amount as at	Amount	amount as at	the end of the
	Amount	the end of	the end of	current period
	as at the	the current	as at the	the prior	to amount as at
	end of the	period to total	end of the	period to total	the end of the
Item	current period	assets (%)	prior period	assets (%)	prior period (%)	Explanation
Accounts receivable	566,333,766.23	3.73	376,672,529..11	3..07	50..35	Mainly due to the addition of operating
						projects such as Phase II of Anshun
						Project, Hongan Project, Yichun
						Project, Huizhou Phase II Project,
						Haining Expansion Project and
						Sihui Project during the period and
						the increase in income of some
						project companies and extension
						in settlement period of national
						renewable energy subsidies as of the
						end of the Reporting Period

22	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

		Percentage of		Percentage of	Change of
			amount as at
		amount as at	Amount	amount as at	the end of the
	Amount	the end of	the end of	current period
	as at the	the current	as at the	the prior	to amount as at
	end of the	period to total	end of the	period to total	the end of the
Item	current period	assets (%)	prior period	assets (%)	prior period (%)	Explanation
Contract assets	513,397,453.28	3.38	273,117,676..11	2..23	87..98	Mainly due to the addition of operating
						projects such as Phase II of Anshun
						Project, Haining Expansion Project
						and Sihui Project as of the end of the
						Reporting Period, and some projects
						under operation which have not been
						included in the directory of national
						renewable energy subsidies, and
						the increase in the accumulated
						balance of receivables from national
Long-term receivables						renewable energy subsidies
4,805,031,641.01	31.66	4,196,344,697..36	34..20	14..51	Mainly due to the increase in
						construction expenditure of Haining
						Expansion Project, Hongan Project,
						Pingyang Phase II Project, Shishou
						Project, Yongjia Phase II Project and
Intangible assets						Jinsha Project
6,961,736,520.82	45.87	5,399,154,357..18	44..00	28..94	Increase in construction expenditure
Other non-current assets	894,412,730.09	5.89	757,012,722..53	6..17	18..15	Mainly due to the increase in deductible
						input tax and prepayment for
Short-term loans						construction and equipment
3,327,151,573.62	21.92	1,971,000,000..00	16..06	68..81	Mainly due to the increase in borrowings
Accounts payable						from BSAM
1,253,146,890.43	8.26	1,052,707,854..04	8..58	19..04	Mainly due to the increase in payables
						for construction and equipment for
Long-term loans						projects under construction
5,591,958,365.43	36.84	4,587,186,834..20	37..38	21..90	The increase in investment expenditure

for projects under construction and borrowings from banks and BSAM

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

23

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

2. Assets with restrictive ownership title or right of use as at the end of the Reporting Period

✓ Applicable  □ Not Applicable

			Balance at
			the end
			of the period
	Item	(RMB)	Reason for restriction
		Assets for providing guarantees
		- Monetary funds	83,157,520.00	Assets for providing performance bond
		- Intangible assets	3,479,567,260.91	Providing guarantees for loans
		- Accounts receivable	287,770,239.50	Providing guarantees for loans
		- Contract assets	424,788,757.21	Providing guarantees for loans
		- Long-term receivables due within one year	31,764,250.37	Providing guarantees for loans
		- Long-term receivables	1,706,892,559.41	Providing guarantees for loans
		Total	6,013,940,587.40
3.		Other explanation
	□ Applicable  ✓ Not Applicable

(IV) Financial Review (disclosure pursuant to the requirements of the Stock Exchange)

Financial position and net profit

For the first half of 2020, the Group achieved an operating income of RMB1,011,128,651..22 and net profit of RMB255,592,191..26.. As at 30 June 2020, the Group's total assets and total liabilities amounted to RMB15,177,101,759. .05 and RMB11,507,850,459. .28, respectively. . The total equity amounted to RMB3,669,251,299..77 and the gearing ratio (calculated as total liabilities over total assets) was 75..82%, and the net asset value per share attributable to the shareholders of the Company was RMB2..95..

Revenue analysis

During the Reporting Period, the Group achieved an operating income of RMB1,011,128,651. .22 (corresponding period in 2019: RMB795,270,932..19), representing an increase of 27..14% as compared to the corresponding period in 2019.. The increase was mainly due to an increased number of projects.. In particular, project operating income amounted to RMB853,065,884..54 (corresponding period in 2019: RMB657,492,656..94), representing an increase of 29..75% as compared to the corresponding period in 2019, mainly due to the addition of operating projects such as Sihui Project, Hongan Project, Yichun Project, Huizhou Phase II Project, Haining Expansion Project and Phase II of Anshun Project.. Interest income amounted to RMB158,062,766..68 (corresponding period in 2019: RMB137,778,275..25), representing an increase of 14..72% as compared to the corresponding period in 2019.. The increase was mainly due to the increase in interest income recognised by using effective interest method as a result of the increase in the long-term receivables recognised based on the completion percentage for the construction of waste- to-energy projects, e..g.., Haining Expansion Project, Hongan Project, Shishou Project, Pingyang Phase II Project and Yongjia Phase II Project..

24	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

Gross profit and gross profit margin

During the Reporting Period, the gross profit of the Group increased by 34..96% to RMB574,799,368..65 (corresponding period in 2019: RMB425,889,230..31) and the gross profit margin was 56..85% (corresponding period in 2019: 53..55%), mainly because the gross profit margins of new operating projects, i..e.. Hongan Project, Huizhou Phase II Project and Haining Expansion Project, are above average; and overhaul expenditure decreased when compared with the same period in the previous year..

Administrative expenses

During the Reporting Period, the administrative expenses of the Group amounted to approximately RMB59,689,417..95 (corresponding period in 2019: RMB55,188,466..26), which accounted for approximately 5..90% (corresponding period in 2019: 6..94%) of the operating income of Group.. The administrative expenses slightly decreased as compared to the previous year..

Finance costs

During the Reporting Period, the finance costs for the Group amounted to RMB197,855,721..26, representing an increase of approximately RMB46,059,549..00 over the corresponding period of previous year.. This was mainly due to an increase in borrowings and an increase in expensed interest as certain projects shifted from construction period into operation period..

Total profit

During the Reporting Period, the total profit of the Group amounted to RMB303,850,241..65, representing an increase of approximately RMB57,340,686..15 as compared to corresponding period in 2019, which was mainly due to an increase in gross profit..

Income tax

During the Reporting Period, the income tax expenses of the Group amounted to approximately RMB48,258,050..39 (first half of 2019: RMB28,221,975..10), accounting for approximately 15..88% (first half of 2019: 11..45%) of total profit of the Group.. The ratio of income tax expenses to total profit increased mainly because certain subsidiaries turned losses into gains, which made up for the reversal of deferred tax assets from losses of previous years..

Total comprehensive income attributable to the shareholders of the Company

During the Reporting Period, the total comprehensive income attributable to the shareholders of the Company was RMB247,396,115..10 (corresponding period in 2019: RMB217,139,204..89).. The increase was mainly due to an increase in net profit..

Financial resources and liquidity

The Group adopts prudent principles in cash and financial management to ensure proper risk management and reduction in costs of fund.. It finances its operations primarily from cash flow generated internally and loans from principal banks.. As at 30 June 2020, the Group had cash and cash equivalents of approximately RMB590,620,068..10, representing an increase of RMB238,636,649..55 as compared to RMB351,983,418..55 at the end of 2019.. The cash balance increased as compared with last year mainly because the net cash inflow from financing activities exceeded the net cash outflow from project construction.. As at 30 June 2020, the Group's gearing ratio increased from 74..42% at the end of 2019 to 75..82%.. The increase was mainly due to the increase in borrowings..

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

25

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

Capital management

The Group's primary objective when managing capital is to safeguard the Group's ability to continue as a going concern, so that it can provide returns for its shareholders while maintaining reasonable capital structure to reduce capital costs.. The Group makes use of its gearing ratio for the management of capital structure.. The ratio is defined as total liabilities divided by total assets.. During the six months ended 30 June 2020, the Group's strategy remained unchanged from 2019.. As at 30 June 2020 and 31 December 2019, the gearing ratios of the Group were 75..82% and 74..42%, respectively..

Loans and borrowings and pledge of assets

As at 30 June 2020, the Group had total outstanding borrowings of approximately RMB9,557,221,038..45, representing an increase of RMB1,370,642,488..55 as compared to RMB8,186,578,549..90 at the end of 2019.. The borrowings included pledged loans of RMB3,310,130,319..82 and unpledged loans of RMB6,247,090,718..63.. The Group's borrowings were denominated in Renminbi and Hong Kong dollars.. Most of the Group's borrowings were at floating rates.. As at 30 June 2020, the Group had composite banking credit facilities in the amount of RMB12,720,833,200..00, of which RMB4,843,116,011..67 had not been utilised.. The composite banking credit facilities had terms ranging from 1 year to 15 years.. The Group currently does not have any interest rate hedging policies.. However, the management team keeps monitoring the Group's interest rate risks and would consider other necessary actions when significant interest rate risks are anticipated to occur.. Certain receivables and operating rights in connection with the Group's service concession arrangements (including intangible assets, long-term receivables, long-term receivables due within one year, contract assets and accounts receivable) were pledged under the banking credit facilities.. The book value of the pledged receivables and operating rights amounted to approximately RMB5,930,783,067..40 as at 30 June 2020..

Contingent liabilities

The Company has issued financial guarantees to banks in respect of the banking credit facilities granted to certain subsidiaries.. The Board of the Company does not consider it is probable that a claim will be made against the Company under the guarantees.. The maximum liability of the Company as at 31 December 2019 and 30 June 2020 under the guarantees was the credit facility drawn down by the subsidiaries of RMB4,704,039,786..30 and RMB5,826,463,572..48, respectively..

Commitments

As at 31 December 2019 and 30 June 2020, the Group's outstanding purchase commitments in relation to the construction contracts which had not been provided for in the Group's interim financial statements were RMB3,253,403,648..99 and RMB2,790,405,709..93, respectively..

Foreign exchange risks and exchange gains and losses

The functional currency of the Group is Renminbi while a portion of funds of the Group is in the form of bank deposits denominated in Hong Kong dollars.. Therefore, it may be subject to the risks of exchange rate fluctuations of the Renminbi and Hong Kong dollars.. Apart from the above, most of the assets and transactions of the Group are denominated in Renminbi, and the Group mainly settles its operating expenses in the PRC with income generated in Renminbi, thus the Group is not exposed to any significant foreign exchange risks.. The Group currently has no hedging policy with respect to the foreign exchange risks..

26	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

(V) Investment analysis

1. Overall analysis of external equity investments

✓ Applicable  □ Not Applicable

Investments	Investments
during the Reporting	during the corresponding
Period (RMB)	period last year (RMB)	Change
464,057,500..00	560,386,540..04	-17..19%

1. Material equity investments
   □ Applicable  ✓ Not Applicable
2. Material non-equity investments
   ✓ Applicable  □ Not Applicable

		Investment
		during the	Accumulated
		Reporting Period	investment
Name of project	Source of funding	(RMB'0,000)	(RMB'0,000)	Project progress
Haining Expansion Project	Self-financing and borrowings	19,910..93	68,689..27	Trial operation in April 2020
Huizhou Phase II Project	Self-financing and borrowings	14,568..66	62,463..95	Trial operation in May 2020

Note: disclosure pursuant to the format standards for interim report for A shares..

1. Financial assets measured at fair value
   □ Applicable  ✓ Not Applicable
2. Details of future material investment or capital assets planning
   As at 30 June 2020, save for the investment or construction of the waste-to-energy projects won by the Company through tender as announced in prior announcements and described in this interim report, the Group had no plan for material investment or acquisition of capital assets . However, the Company will actively pursue opportunities for investments in its ordinary course of business in order to enhance its profitability .

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

27

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

(VI) Material disposal of assets and equity

• Applicable  ✓ Not Applicable

(VII) Analysis of major controlling and companies invested by the Company

• Applicable  □ Not Applicable

			Registered				Operating	Operating
Name of company	Principal business	Shareholding	capital	Total assets	Net assets	Net profit	income	profit
Huizhou Company	Waste treatment and	100%	22,000	69,133..57	34,563..88	2,406..93	5,967..62	2,773..68
	power generation
Wuhan Company	Waste treatment and	100%	12,948..43	46,309..03	31,388..18	2,179..23	5,030..19	2,928..72
	power generation
Tongzhou Company	Waste treatment and	100%	37,500	140,748..45	51,823..10	6,107..86	10,955..27	6,367..55
	power generation
Zhangqiu Company	Waste treatment and	100%	17,294	63,798..09	20,324..23	2,182..93	5,558..85	2,219..18
	power generation

As at the end of the Reporting Period, the total assets of Tongzhou Company represented 9..27% of the total assets of the Company and the total assets of other companies represented less than 5% of the total assets of the Company..

As waste-to-energy business can bring about good investment return to the Company, the Company will continue to deepen the municipal waste-to-energy industry..

(VIII) Structured entities controlled by the Company

• Applicable  ✓ Not Applicable

28	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

1. Other disclosures
2. 1. Warning and explanation about anticipated loss on the accumulated net profit for the period from the beginning of the year to the end of the next reporting period or significant change as compared with the corresponding period last year
      □ Applicable  ✓ Not Applicable

1. Potential risks
   ✓ Applicable  □ Not Applicable

1. Risk of industry policies

The waste-to-energy industry is greatly affected by industry policies.. Pursuant to the Renewable Energy Law of the PRC (《中華人民共和國可再生能源法》) (as amended in 2009), the government implements a full coverage purchase system for renewable energy power generation.. Pursuant to the Notice on Improving the Pricing Policy of Waste Incineration Power Generation from the NDRC (Fa Gai Jia Ge [2012] No.. 801)《國家發展改革委關於完善垃圾焚燒發電價格政策的通知》(發改價格[2012] 801號) issued by the NDRC on 28 March 2012, the waste-to-energy projects are converted into on- grid electricity based on the volume of waste treatment received in the plants with a conversion ratio of 280 kWh per ton of municipal waste.. The part that does not exceed the above-mentioned amount of electricity implements a national waste-to-energy benchmark price of RMB0..65 per kWh (inclusive of tax).. The part that exceeds the abovementioned amount of electricity implements the on-grid tariff for the local coal-fired generating units.. All the waste-to-energy projects approved after 2006 shall follow such regulation.. In the future, if the government reduces its support for the waste-to-energy industry, the operations, profitability and cash flows of the Company may be adversely affected..

The Company will pay close attention to policy developments and convey our desire to maintain policy stability through industry organizations.. When negotiating a concession agreement, we will increase corresponding terms that if there is a major change in the external policy, the loss can be compensated by raising the garbage disposal fee..

2. Risk of environmental protection policies

The waste-to-energy business conducted by the Company is strictly regulated by the environmental protection departments at all levels in the country.. In recent years, the environmental pollution problems have become increasingly prominent in the PRC.. On the one hand, the government has introduced favourable policies to support the rapid development of the environmental protection industry, and on the other hand, it has also strengthened the supervision on the environmental protection industry.. The Company operates in strict compliance with the relevant requirements of the environmental protection departments.. As the government has been raising the environmental protection standards, the Company's investment in environmental protection will correspondingly increase, which may adversely affect the operations, profitability and cash flows of the Company..

The Company will increase power generation through technology research and development, facility renovation and improvement of operation management to offset the adverse impact of rising costs in environmental protection..

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

29

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

3. Risk of tax policies

The Company and its subsidiaries rely on the government's policies in respect of the environmental protection industries to enjoy tax incentives for certain taxes such as corporate income tax and value- added tax.. From 2018 to 2019, the Company enjoyed total tax incentives of RMB136..7549 million and RMB154..3173 million respectively, accounting for 34..34% and 32..56% of the total profit of the Company for the year.. If the country reduces the tax incentives for the environmental protection industries in the future, the operations, profitability and cash flows of the Company may be adversely affected..

The Company will pay close attention to policy developments and convey our desire to maintain policy stability through industry organizations.. When negotiating a concession agreement, we will increase corresponding terms that if there is a major change in the external policy, the loss can be compensated by raising the garbage disposal fee..

4. Risk of negative public perceptions on waste-to-energy business

The public may have a negative perceptions on waste-to-energy business.. The public may be worried that the construction and operation of the projects may cause secondary pollution to the surrounding environment.. As regard to this, the NDRC added a social stability risk assessment procedure in the project approval procedures, and the Ministry of Environmental Protection also strengthened the requirements for environmental impact assessment and further regulated the environmental impact assessment hearings and public investigation procedures.. The "Not in My Back Yard" effect and the strict regulatory policies of the government intensify the difficulty of project site selection, leading to an increase in project preparation time and costs.. If the negative public perceptions on waste-to- energy business are further aggravated in the future, the profitability of the Company may be adversely affected as a result of increased difficulty of operation..

The Company will discharge pollutants strictly according to environmental protection standards and will publish emission data to public.. The Group will organize community residents to visit the waste-to- energy plants operated by the Group to provide the public with a deeper understanding of waste-to- energy business..

5. Risk of unstable supply and calorific value of municipal solid waste

The operating efficiency of a waste-to-energy plant depends on the supply and calorific value of municipal solid waste.. Municipal solid waste is mainly transported by the local government to the waste-to-energy plant of the Company by land transportation.. The supply is mainly affected by the local waste collection system and the size of local population.. If the local government lacks of or fails to establish a complete waste collection and delivery system on time, it will not be able to supply the Company with consistent and stable supply of municipal solid waste, which may result in insufficient capacity utilisation of the Company.. In addition, the calorific value of waste will also affect the amount of electricity generated by waste-to-energy plants.. If the calorific value of municipal solid waste is low, the amount of electricity generated cannot be guaranteed.. Therefore, the instability of the supply and calorific value of municipal solid waste may affect the operational efficiency of the waste-to-energy plants of the Company, which will adversely affect the operations and profitability of the Company..

Before signing concession agreements, the Group conducts a full evaluation and analysis of the quantity and calorific value of the wastes provided by the government to ensure that wastes are provided in accordance with the quantity and quality reasonably agreed in the concession agreement.. In the case of insufficient quantity of garbage and insufficient calorific value, the Group will actively search for domestic garbage and pollution-free combustion material in the garbage supply area and surrounding areas.. In addition, as agreed in the concession agreement, if the amount of garbage is lower than the guaranteed value, the government will pay the fee at the guaranteed value to the Group..

30	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

IV.  DISCUSSION AND ANALYSIS OF OPERATIONS (CONTINUED)

6. Risk of cost overruns and delays in the construction of the BOT projects of the Company

The cost and progress of the project construction are affected by a number of unfavourable factors, including price fluctuations in construction materials, equipment and components, shortages in the supply of equipment, materials or manpower, strikes and labour disputes, unexpected engineering, design, environmental or geological issues, impact of supporting infrastructure facilities, unexpected increase in costs, the "Not in My Back Yard" effect and others.. These factors may be beyond the control of the Company, which may lead to cost overruns and delays in the construction of the BOT projects of the Company, which may in turn result in the Company's failure to achieve the expected returns and adversely affect the operations and financial conditions of the Company..

The Group pays attention to the establishment of a harmonious relationship with the government agencies related to the project and urges the government to complete all legal procedures and ancillary infrastructure facilities of the project.. The Group clearly stipulated in the concession agreement that if the project construction conditions are not reached, or the project is suspended, the construction period is delayed, and the cost is increased due to the reasons caused by the government, then the government should compensate the project investors accordingly.. In addition, the Group selects suppliers meticulously, demands the construction units to keep a high level of attention to project construction, increase investment in personnel and equipment, and forms a strong project management team..

7. Risk of substandard performance in environmental protection

In the course of project construction and operation, the Company may be subject to environmental pollution risks such as air pollution, noise pollution, harmful substances, sewage and solid waste discharge.. Although the Company has adopted measures such as waste gas purification, waste water and solid waste treatment and noise prevention to avoid or minimize the potential adverse impact of its projects on the environment, environmental pollution risks may still exist due to equipment failures or human errors in the actual production and operation processes of the project companies, which may adversely affect the operations, brand reputation and profitability of the Company..

The Group attaches great importance to environmental protection compliance, starting with corporate culture, management system, financial budget as well as supervision and assessment to ensure that our emissions meet the standards..

8. Risk of high gearing ratio

Municipal waste-to-energy is a capital-intensive industry, and project construction funds are generally raised by 30% of capital and 70% of bank loans.. The Company has recently many projects under construction, resulting in an increase in the gearing ratio.. As of the end of June 2020, the Company's gearing ratio was 75..82%, higher than the industry average.. With the tightening domestic monetary and poor lending channels, the operations, financial conditions and cash flow of the Company may be affected adversely..

The Company prepares an investment and financing plan according to financial budget each year to give an overall plan on cash inflow and outflow; The Company, on the one hand, maintains sufficient credit line in the bank and applies for financial support from the controlling shareholder when necessary and, on the other hand, reduces the gearing ratio through equity financing..

1. Other disclosure
   □ Applicable  ✓ Not Applicable

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

31

V.  SIGNIFICANT EVENTS

1. Overview of general meetings

			The enquiry index at	Disclosure date
			designated websites where the	of the published
Session of the meeting	Date of meeting	resolutions were published	resolutions
2019 Annual General Meeting	22	May 2020	www..hkexnews..hk	Stock Exchange:
			www..sse..com..cn	22 May 2020
				SSE: 23 May 2020
2020 first extraordinary	29	June 2020	www..hkexnews..hk	Stock Exchange:
general meeting			www..sse..com..cn	29 June 2020
				SSE: 30 June 2020

Explanation of general meetings

1. □ Applicable  ✓ Not applicable

2. Proposal of profit distribution or conversion of capital reserve

1. Proposal of profit distribution or conversion of capital reserve to share capital for the first half of the year

Any distribution or capital increase	No

Number of bonus shares for every 10 shares (share) Dividends for every 10 shares (RMB) (Tax inclusive) Reserve to share capital for every 10 Shares (share)

Details of proposal of profit distribution or conversion of capital reserve

The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2020

32	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

V.  SIGNIFICANT EVENTS (CONTINUED)

1. Performance of undertakings
2. 1. Undertakings during or carried forward to the Reporting Period by the Company's beneficial controllers, shareholders, related parties, acquirers of the Company and the Company
      ✓ Applicable  □ Not applicable

							If not
						Whether the	performed	If not
					Whether	undertaking	timely,	performed
				Time and	there is	was strictly	describe	timely, describe
Background of	Type of	Undertaking	Details of	period of the	deadline for	and timely	the specific	plans in next
undertaking	undertaking	party	undertaking	undertaking	performance	performed	reasons	steps
Undertakings	Restriction on	BSAM	Within 36 months from the listing date	11 June 2018 to	Yes	Yes
related to initial	selling of		of the A shares of Dynagreen, the	10 June 2021
public offering	shares		shares issued prior to the public
			offering of shares by Dynagreen
			directly or indirectly held by
			the company shall neither be
			transferred or entrusted to other
			parties for management, nor be
			repurchased by Dynagreen.. If the
			closing prices of the shares are
			lower than the issue price for 20
			consecutive trading days within
			6 months after the listing of the A
			shares of Dynagreen, or the closing
			price is lower than the issue price as
			at the end of the six-month period
			upon the listing, the lock-up period
			for the issuer's shares held by the
			company shall be automatically
			extended by 6 months..

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

33

V.  SIGNIFICANT EVENTS (CONTINUED)

							If not
						Whether the	performed	If not
					Whether	undertaking	timely,	performed
				Time and	there is	was strictly	describe	timely, describe
Background of	Type of	Undertaking	Details of	period of the	deadline for	and timely	the specific	plans in next
undertaking	undertaking	party	undertaking	undertaking	performance	performed	reasons	steps
	Others	BSAM	For the shares of Dynagreen held	11 June 2021 to	Yes	Yes

			by the company prior to the initial	10 June 2023
			public offering of A shares by
			Dynagreen, if the company reduces
			the shares held within two years
			after the expiry of the lock-up
			period, the price shall not be lower
			than the issue price and the issuer's
			shares reduced each year shall not
			exceed 5%..
Undertakings	Others	Qiao Dewei, Hu	For the shares of Dynagreen held by	11 June 2019 to	Yes	Yes
related to initial		Shengyong, Hou	the undertaking party prior to the	10 June 2021
public offering		Zhiyong, Cheng Yan,	initial public offering of A shares by
		Huang Jianzhong,	Dynagreen, if the undertaking party
		Zhong Xia, Zhang	reduces the shareholding held
		Yong and Zhu	within two years after the expiry of
		Shuguang	the lock-up period, the price shall
			not be lower than the issue price..
Undertakings	Others	BSAM, Qiao Dewei,	The proposal on price stabilisation will	11 June 2018 to	Yes	Yes
related to initial		Hu Shengyong, Hou	be executed when the share prices	10 June 2021
public offering		Zhiyong, Cheng Yan,	of Dynagreen are lower than the
		Huang Jianzhong,	latest audited net assets per share
		Zhong Xia, Zhang	for 20 consecutive trading days
		Yong and Zhu	within 3 years after listing..
		Shuguang
Undertakings	Others	BSAM	For any loss or risk of Dynagreen	30 May 2016	No	Yes
related to initial			and its subsidiaries caused by
public offering			BOT projects not obtained through
			bidding, BSAM will provide timely,
			full and effective compensation
			to Dynagreen and its subsidiaries
			to ensure Dynagreen and/or its
			domestic subsidiaries will not suffer
			any loss..

34	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

V.  SIGNIFICANT EVENTS (CONTINUED)

IV. Appointment or dismissal of auditors

Explanation of appointment or dismissal of auditors

• Applicable  □ Not applicable

During the Reporting Period, as passed at the 2019 annual general meeting of the Company, the Company appointed KPMG Huazhen LLP as its auditors to provide financial reporting, internal control and audit services for the Company in 2020 with a term from the date of the general meeting at which this resolution was passed to date of the conclusion of the next annual general meeting..

Explanation of change of auditors during the audit period

• Applicable  ✓ Not applicable

Explanation of the Company on the "non-standard audit report" issued by auditors

• Applicable  ✓ Not applicable

Explanation of the Company on the "non-standard audit report" issued by the registered accountant in the financial statements of last year's annual report

1. • Applicable  ✓ Not applicable
2. Matters related to bankruptcy and reorganization
3. • Applicable  ✓ Not applicable

VI. Material litigation and arbitration

• The Company had material litigation and arbitration during the Reporting Period

• The Company did not have material litigation and arbitration during the Reporting Period

VII. Punishment and rectification of the Company and its Directors, Supervisors, senior management, controlling shareholder, beneficial controllers and bidders

• Applicable  ✓ Not applicable

VIII. Explanation on credibility of the Company and its controlling shareholder and beneficial controllers during the Reporting Period

• Applicable  ✓ Not applicable

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

35

V.  SIGNIFICANT EVENTS (CONTINUED)

IX. Equity incentive plan, employee shareholding plan or other employee incentive measures of the Company and their impacts

1. Equity incentive matters which have been published in temporary announcements and without further progress or changes
   □ Applicable  ✓ Not applicable

1. Incentive which have not been published in temporary announcements or with further progress

Equity incentive

• Applicable  ✓ Not applicable

Other explanation

• Applicable  ✓ Not applicable

Employee shareholding plan

• Applicable  ✓ Not applicable

Other incentive measures

1. □ Applicable  ✓ Not applicable

2. Significant related party transactions
3. 1. Related party transactions in connection with day-to-day operation

1. Matters which have been published in temporary announcements and without further progress or changes
   □ Applicable  ✓ Not applicable
2. Matters which have been published in temporary announcements but with further progress or changes (connected transactions disclosed pursuant to the requirements of the Stock Exchange Listing Rules)

• Applicable  □ Not applicable

On 28 August 2019, the Company and Shenzhen Crystal Digital Technology Co.., Ltd.. (深圳水晶石 數字科技有限公司) ("Shenzhen CDT") entered into a Service Framework Contract, pursuant to which publicity display design and construction were proposed to be carried out for thirteen municipal waste- to-energy projects of the Company in 2019 to 2020 and the Company will irregularly hold tender for the publicity display design and construction services of its municipal waste-to-energy projects in which Shenzhen CDT shall participate.. If Shenzhen CDT successfully wins a tender for the project services, the Company will further enter into a specific project service contract with Shenzhen CDT according to the contents of the relevant letter of acceptance to clarify the specific fee and payment method.. In 2019 and 2020, the estimated caps of the day-to-day related party transactions with Shenzhen CDT are RMB14 million and RMB26 million, respectively.. In 2019, the transaction amount under contracts between the Company and Shenzhen CDT was RMB5..60 million which did not exceed the estimated annual cap for the year.. In the first half of 2020, the transaction amount under contracts between the Company and Shenzhen CDT was RMB5..70 million..

36	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

V.  SIGNIFICANT EVENTS (CONTINUED)

1. 1. Matters which have not been published in temporary announcements
   2. • Applicable  ✓ Not applicable
2. Related party transactions in connection with purchase or sale of assets or equity interest
3. 1. Matters which have been published in temporary announcements and without further progress or changes
   2. • Applicable  ✓ Not applicable
   3. Matters which have been published in temporary announcements but with further progress or changes
   4. • Applicable  ✓ Not applicable
   5. Matters which have not been published in temporary announcements
   6. • Applicable  ✓ Not applicable
   7. Disclose the performance of the results relating to the results agreement during the Reporting Period
   8. • Applicable  ✓ Not applicable

1. Significant related party transactions in connection with joint external investment
2. 1. Matters which have been published in temporary announcements and without further progress or changes
   2. • Applicable  ✓ Not applicable
   3. Matters which have been published in temporary announcements but with further progress or changes
   4. • Applicable  ✓ Not applicable
   5. Matters which have not been published in temporary announcements
   6. • Applicable  ✓ Not applicable

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

37

V.  SIGNIFICANT EVENTS (CONTINUED)

(IV) Claims and liabilities between related parties

1. Matters which have been published in temporary announcements and without further progress or changes
   □ Applicable  ✓ Not applicable
2. Matters which have been published in temporary announcements but with further progress or changes

• Applicable  □ Not applicable

The balance of the financial assistance provided by BSAM to the Company based on benchmark rate was RMB3..39 billion as at the end of the Reporting Period..

The balance of the borrowings provided by Company to the Fengcheng Company was RMB0 as at the end of the Reporting Period..

1. 3. Matters which have not been published in temporary announcements

   □ Applicable  ✓ Not applicable

2. Other significant related party transactions

• Applicable  ✓ Not applicable

(VI) Others

• Applicable  □ Not applicable

The Group entered into the Non-Competition Agreement with BSAM (a connected entity of the Company by virtue of being the controlling shareholder of the Company) on 23 December 2013, under which BSAM has agreed not to and will procure its subsidiaries (other than listed subsidiaries of BSAM) not to compete with us in our Core Business and has granted us options for new business opportunities, the call option and preemptive rights.. In addition, if requested by the Hong Kong Stock Exchange or other regulatory authorities, BSAM will use its best endeavors to procure its associated companies and joint ventures (if any) to comply with the Non-Competition Agreement.. According to the Non-Competition Agreement, when the Group decides whether to exercise the options for acquisition of new business opportunities, subscription right or the pre-emptive rights, the Group shall comply with related requirements under the Chapter 14A of the Stock Exchange Listing Rules.. The Company and the independent non-executive Directors have received the statement issued by BSAM confirming its compliance with the Non-Competition Agreement during the Reporting Period..

The Group entered into certain transactions with parties regarded as "related parties" under the applicable accounting standards during the year ended 30 June 2020.. Save as the non-exempt connected transaction and continuing connected transaction as set out in the section headed "Connected transactions" on page 37 of this interim report, these related party transactions were not regarded as connected transactions under the Listing Rules and were fully exempt from shareholders' approval, annual review and all disclosure requirements pursuant to Chapter 14A of the Listing Rules.. Details are set out in note 10 to the Financial Statements.. The Company has complied with the disclosure requirements in accordance with Chapter 14A of the Exchange Listing Rules..

38	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

V.  SIGNIFICANT EVENTS (CONTINUED)

XI. MATERIAL CONTRACTS AND THEIR PERFORMANCE

1. Trusteeship, contracting and leasing matters
   □ Applicable  ✓ Not applicable
2. Guarantees

• Applicable  □ Not applicable

Unit: RMB

External guarantees provided by the Company (excluding those for subsidiaries)

Relationship

Date of

Between

occurrence

the

of guarantee

Connected

guarantor

(signature

Date of

Expiry

Anti-

parties

and the

Guaranteed

Amount of

date of

commencement

date of

Guarantee

Completed

Overdue

Amount

guarantee

guarantee

Connected

Guarantor

Company

party

guarantee

agreement)

of guarantee

guarantee

type

or not

or not

overdue

or not

or not

relations

The Company

Head office

Fengcheng

310,000,000

1 July 2019

30 July 2019

30 July 2029

Joint and

No

No

0

No

Yes

Joint

of the

Company

several liability

venture

Company

guarantee

Total guarantees during the Reporting Period (excluding those for subsidiaries)

51,449,657..67

Total guarantee balance as at the end of Reporting Period (A) (excluding those for subsidiaries

267,198,749..38

Guarantees for subsidiaries provided by the Company

Total guarantees for subsidiaries during the Reporting Period

1,223,295,176..16

Total guarantee balance for subsidiaries as at the end of Reporting Period (B)

5,559,264,823..10

Total amount of guarantees provided by the Company (including those for subsidiaries)

Total amount of guarantees (A+B)

5,826,463,572..48

Total amount of guarantees over the net assets of the Company (%)

158..79

Including:

Amount of guarantees provided to shareholders, beneficial controllers and their related parties (C)

0

Amount of debt guarantees directly or indirectly provided for guaranteed parties with the gearing ratio exceeding

70% (D)

1,697,463,183..05

Amount of the total guarantees exceeding 50% of net assets (E)

4,112,688,260..66

Total amount of above three guarantees (C+D+E)

5,810,151,443..71

Explanations on outstanding guarantee which may undertake joint liability for satisfaction

Explanations on guarantees

Note: The guarantee of RMB310 million provided for Fengcheng Company is the maximum amount under the guarantee contract and the guarantee balance of RMB267,198,749..38 is the actual balance as at 30 June 2020..

3 Other material contracts

□ Applicable  ✓ Not applicable

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

39

V.  SIGNIFICANT EVENTS (CONTINUED)

XII. Poverty alleviation work of the Company

• Applicable  ✓ Not applicable

XIII. Convertible bonds

• Applicable  ✓ Not applicable

XIV.Environmental information

1. Explanation on environmental protection of the Company and its major subsidiaries falling into the category of major pollutant-emission units designated by the environmental protection authorities
   ✓ Applicable  □ Not applicable

1. Information on pollutant emission

✓ Applicable  □ Not applicable

Huizhou Company, Tongzhou Company, Zhangqiu Company and Wuhan Company, which are subsidiaries of the Company, are the major pollutant-emission units designated by the environmental protection authorities.. All companies mentioned above are operating entities of municipal waste-to- energy plants..

The main pollutants generated from the major pollutant-emission units of the Company are sulfur dioxide, smog and oxynitride.. Sulfur dioxide, smog and oxynitride are emitted from smog.. The above pollutants are treated by the smog treatment system according to standard and then emitted through the chimney..

40	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

V.  SIGNIFICANT EVENTS (CONTINUED)

The concentration of major pollutants discharged from projects of the above companies during the Reporting Period as stated in the latest commissioned test report is summarised as follows:

		Name of		Number and date of the			Emission
No.	Name of unit	pollutants	Testing institution	testing report	Emission concentration	limit
1	Huizhou	Sulfur dioxide	South China Institute of	Hua Huan Jian Ce Zi	1# furnace	ND	100
	Company		the Ministry of Ecology and	2020 No.. 290;	2# furnace	1	100
			Environment	8 May 2020	3# furnace	ND	100
		Oxynitride	(生態環境部華南環境科學		1# furnace	98	300
			研究所)		2# furnace	138	300
					3# furnace	123	300
		Smog			1# furnace	ND	30
					2# furnace	0..69	30
					3# furnace	0..27	30
		Dioxin		Hua Huan Jian Ce Zi [Dioxin]	1# furnace	0..009	0..1
				2020 No.. 080;	2# furnace	0..011	0..1
				29 April 2020	3# furnace	0..009	0..1
2	Tongzhou	Sulfur dioxide	Beijing Centre Testing	A2200120452102;	1# furnace	<2	100
	Company		International Group Co.., Ltd	24 June 2020
			(華測檢測認證集團北京	A2200120452102;	2# furnace	<2	100
			有限公司)	11 June 2020	3# furnace	<2	100
		Oxynitride		A2200120452102;	1# furnace	24	300
				24 June 2020
				A2200120452102;	2# furnace	45	300
				11 June 2020	3# furnace	44	300
		Smog		A2200120452102;	1# furnace	<0..8	30
				24 June 2020
				A2200120452102;	2# furnace	<0..92	30
				11 June 2020	3# furnace	<0..76	30
		Dioxin		A2200113539102;	1# furnace	0..012	0..1
				8 May 2020	2# furnace	0..0023	0..1
				A2200026310102;	3# furnace	0..0019	0..1
				26 March 2020
3	Zhangqiu	Sulfur dioxide	Shandong Analysis and	SFW201220;	1# furnace	15	100
	Company		Test Center	9 June 2020	2# furnace	21	100
			(山東省分析測試中心)		3# furnace	6	100
		Oxynitride			1# furnace	101	300
					2# furnace	96	300
		Smog			3# furnace	100	300
					1# furnace	7..8	30
					2# furnace	8..8	30
					3# furnace	7	30
		Dioxin	Shandong Weipu Test	WSD-20021004-HJ-01;	1# furnace	0..0029	0..1
			Technology Service Co., Ltd.	20 February 2020	2# furnace	0..0033	0..1
			(山東微譜檢測技術有限公司)		3# furnace	0..0037	0..1

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

41

V.  SIGNIFICANT EVENTS (CONTINUED)

		Name of		Number and date of the			Emission
No.	Name of unit	pollutants	Testing institution	testing report	Emission concentration	limit
4	Wuhan	Sulfur dioxide	Wuhan Huaxin Physical	A2200060806102002;	1# furnace	ND	100
	Company		and Chemical Testing	15 April 2020	2# furnace	ND	100
			Technology Co.., Ltd..		3# furnace	ND	100
		Oxynitride	(武漢市華信理化檢測技術		1# furnace	146	300
			有限公司)		2# furnace	172	300
					3# furnace	198	300
		Smog			1# furnace	ND	30
					2# furnace	ND	30
					3# furnace	ND	30
		Dioxin	Jiangxi Gaoyan Test	JDF20050031;	1# furnace	0..035	0..1
			Technology Service Co.., Ltd..	2 June 2020	2# furnace	0..016	0..1
			(江西高研檢測技術服務		3# furnace	0..074	0..1
			有限公司)

Note: "ND" refers to not detected; the unit of sulfur dioxide, oxynitride, smog, and dioxin is ngTEQ/m3..

The above emission limits of pollutants are based on the Municipal Solid Waste Incineration Pollution Control Standards (《生活垃圾焚燒污染控制標準》) (GB18485-2014).. The regular commissioned test reports issued with respect to the major pollutant-emission units during the Reporting Period indicated that the emissions of pollutant met the prescribed standards and there was no excessive emission..

42	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

V.  SIGNIFICANT EVENTS (CONTINUED)

The estimated total emissions and the approved total annual emissions of major pollutants of the above companies during the Reporting Period are summarised as follows:

	Actual	Emission
	emissions	indicators
Name of pollutant	(ton)	(ton/year)
Sulfur dioxide	62..89	423..00
Oxynitride	320..87	1,157..69
Smog	11..51	107..68

2. Construction and operation of facilities for pollution prevention and control

✓ Applicable  □ Not applicable

The pollution prevention facilities constructed for the projects of the Company mainly include smog, waste water and solid waste treatment facilities.. For smog, a combination of "in-furnace SNCR denitrification + semi-dry deacidification + dry deacidification + SCR denitration outside furnace + activated carbon adsorption + bag filter" is mainly adopted for smog purification techniques and the smog is emitted through the chimney after being treated and meeting the emission requirements.. For waste water, the processing techniques of "pretreatment + anaerobic + nitrification denitrification + MBR membrane treatment + nanofiltration + reverse osmosis" are mainly adopted, and the waste water is reused for production or enters the urban sewage plant through pipeline network after being treated and meeting the emission requirements.. For solid waste, ash is solidified before sending to the landfill.. During the Reporting Period, the pollution prevention facilities of each project were operating normally..

3. Environmental impact assessment of construction projects and other environmental protection administrative licensing

✓ Applicable  □ Not applicable

		Date of reply to
		environmental
No.	Name of project	impact assessment	Authority for reply
1	Wuhan Project	24	November 2008	Environmental Protection Department of Hubei Province
2	Huizhou Project	24	December 2014	Environmental Protection Bureau of Huizhou City
3	Tongzhou Project	25	December 2015	Environmental Protection Bureau of Beijing City
4	Zhangqiu Project	31	October 2017	Environmental Protection Bureau of Jinan City

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

43

V.  SIGNIFICANT EVENTS (CONTINUED)

4. Emergency plan for emergency environmental incidents

✓ Applicable  □ Not applicable

In respect of each project, the Company has formulated emergency plans for emergency environmental incidents, and filed the plans with the local environmental protection administrative departments of the local people's government at or above the county level, and organised emergency drills every year according to the plans..

5. Environmental self-monitoring programme

✓ Applicable  □ Not applicable

The Company formulates self-monitoring programme annually according to the national or local pollutant emission standards, environmental impact assessment reports and their approval and environmental monitoring technical specifications, in order to keep abreast of its pollutant emission status and its impact on the surrounding environmental quality.. The results of self-monitoring will be disclosed to the public..

1. 6. Other environmental information to be disclosed

   □ Applicable  ✓ Not applicable

2. Environmental information of companies other than major pollutant-emission units

• Applicable  □ Not applicable

All of the Company's domestic waste incineration power plants are equipped with complete systems for exhaust gas, leachate and fly ash treatment, of which the discharge to the environment have met the standard during the Reporting Period..

1. Reasons for not disclosing the environmental information of companies other than major pollutant-emission units
   □ Applicable  ✓ Not applicable

(IV) Further progress or changes of environmental information disclosed during the Reporting Period

• Applicable  ✓ Not applicable

44	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

V.  SIGNIFICANT EVENTS (CONTINUED)

XV. Compliance with the Corporate Governance Code

The Company has fully complied with all the code provisions in the Corporate Governance Code as set out in Appendix 14 of the Hong Kong Listing Rules for the six months ended 30 June 2020..

XVI.Other matters of significance

1. Compared with the last accounting period, the change of accounting policies, accounting estimates and calculation methods and their reasons and impact
   ✓ Applicable  □ Not applicable

For the contents and reasons of the changes in the current accounting policies and the main impact of the changes, please refer to Note III.. 30 of "Changes in significant accounting policies and accounting estimates" in Section X..

1. The correction on significant accounting errors required to be restated, its amount after correction, reasons and impact during the Reporting Period
   □ Applicable  ✓ Not applicable

(III) Others

• Applicable  □ Not applicable

On 30 October 2019, the Board approved the proposed non-public issuance of A shares, and on 20 December 2019, resolutions on the non-public issuance of A shares were approved at the extraordinary general meeting and the A share class meeting and H share class meeting.. On 14 February 2020, the China Securities Regulatory Commission announced the "Decision on Amending the Administration Measures on Securities Issuance of Listed Companies" (《關於修改〈上市公司證券發行管理辦法〉的決定》) and the "Decision on Amending the Implementation Rules for the Non-public Issue of Shares by Listed Companies" 《關於修改〈上市公司非公開發行股票實施細則〉的決定》..

In view of the above, on 29 May 2020, the Board has approved a revised proposed non-public issuance of A shares, pursuant to which the Company proposes to issue a maximum of 232,240,000 A shares to not more than 35 specific target subscribers, including Beijing State-owned Assets Management Co.., Ltd..* (北京市 國有資產經營有限責任公司), which is expected to raise gross proceeds of up to RMB2,390,000,000.. The issue price of the A shares to be issued under the revised proposed non-public issuance of A Shares shall not be lower than 80% of the average trading price of the A shares during the 20 trading days immediately preceding the pricing benchmark date, and not lower than the net asset value per share attributable to the shareholders of ordinary shares of the Company as set out at the latest audited consolidated financial statements of the Company.. After deducting issuance expenses, the proceeds will be applied towards investment in the construction of the Huizhou Phase II Project, the Jinsha Project, the Pingyang Phase II Project, Shishou Project, the Yongjia Phase II Project, and to repay bank loans of the Company.. On 29 June 2020, resolutions on the revised proposed non-public issuance of A shares were approved at the extraordinary general meeting and the A share class meeting and H share class meeting..

The A shares to be issued under the revised proposed non-public issuance of A shares (assuming fully issued) represents (i) approximately 30..69% of the existing issued A shares and 20..00% of the existing total issued share capital of the Company as at the date of this report; and (ii) approximately 23..48% of the enlarged issued A shares and approximately 16..67% of the enlarged total issued share capital of the Company upon completion of the revised proposed non-public issuance of A shares, and out of which BSAM intends to subscribe for not less than 40% of the A shares to be issued under the proposed non- public issuance of A shares in cash, which in any case shall not be more than 133,000,000 A shares and BSAM will not directly and indirectly in aggregate hold 47..30% or more of the enlarged total issued share capital of the Company upon completion of the proposed non-public issuance of A shares..

For details of the revised proposed non-public issuance of A shares, please refer to the announcements dated 29 May 2020 and 29 June 2020, and the circular dated 11 June 2020..

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

45

VI.  CHANGESINSHARESANDPARTICULARSOFSHAREHOLDERS

1. Changes in share capital
2. 1. Table of changes in shares
      1. Table of changes in shares

During the Reporting Period, there was no change in the total shares and shareholding structure of the Company..

1. Explanation of changes in shares
2. • Applicable  ✓ Not applicable
3. Effect of changes in shares on financial indicators such as earnings per share and net assets per share within the period from the end of the Reporting Period to the disclosure date of the interim report (if any)
4. • Applicable  ✓ Not applicable
5. Repurchase, sales or redemption of listed securities of the Company

During the six months ended 30 June 2019, neither the Company nor its subsidiaries have purchased, sold or redeemed any listed securities of the Company .

1. 5. Other information considered necessary by the Company or required by the securities regulatory authorities to be disclosed

   □ Applicable  ✓ Not applicable

2. Changes in restricted shares

• Applicable  ✓ Not applicable

46	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

VI.  CHANGES IN SHARES AND PARTICULARS OF SHAREHOLDERS (CONTINUED)

II. Shareholders

(I) Total number of shareholders:

Total number of holders of ordinary shares as at the end of the Reporting Period	46,399
Total number of holders of preference shares with restored voting rights as
at the end of the Reporting Period	0

1. Table of shareholdings of the top ten shareholders and the top ten holders of tradable shares (or shareholders not subject to selling restrictions) as at the end of the Reporting Period

							Unit: share
		Shareholding of the top ten shareholders
					Pledged or frozen
				Number of
	Change	Number of		shares
	during the	shares held		held subject
Name of shareholder	Reporting	as at the end		to selling			Nature of
(full name)	Period	of the Period	Percentage (%)	restrictions	Status	Number	shareholder
Beijing State-owned Assets	0	501,189,618	43..16	501,189,618	Nil		State-owned legal
Management Co.., Ltd..							person
HKSCC NOMINEES LIMITED	76,000	379,467,000	32..68	0	Unknown		Overseas legal
Beijing State-owned Assets							person
0	24,859,792	2..14	0	Nil		Overseas	legal
Management (Hong Kong)							person
Company Limited ("BSAM (HK)")
Beijing Huitai Hengrui	-1,199,500	18,000,707	1..55	0	Nil		Domestic	non-
Investment Co.., Ltd..							state-owned
Anhui Jianghuai Growth Investment							legal person
-11,531,429	14,970,043	1..29	0	Nil		Domestic	non-
Fund Centre (Limited Partnership)							state-owned
(安徽省江淮成長投資基金中心							legal person
（有限合夥）)
Gongqingcheng Jingxiu Investment	0	13,311,078	1..15	0	Nil		Domestic	non-
Partnership (Limited Partnership)							state-owned
Zhongshang Longrun Huanke							legal person
-959,200	7,429,630	0..64	0	Pledged	7,429,630	Domestic	non-
Investment Co.., Ltd..							state-owned
(中商龍潤環科投資有限公司)							legal person
Shanghai Zhonghui Jinjiu Investment	-866,505	4,440,119	0..38	0	Nil		Domestic	non-
Co.., Ltd.. - Poly Longma Hongli Equity							state-owned
Investment Fund (Tianjin) Limited							legal person
Partnership (Limited Partnership)
(上海中匯金玖投資有限公司－
保利龍馬鴻利股權投資基金（天津）
合夥企業（有限合夥）)
Shenzhen Fuxiao Investment Co.., Ltd..	2,630,000	2,630,000	0..23	0	Nil		Domestic	non-
(深圳市拂曉投資有限公司)							state-owned
E Fund - Industrial and Commercial							legal person
2,304,439	2,304,439	0..20	0	Nil		Other
Bank of China - E Fund No.. 2

Asset Management Plan

(易方達基金－工商銀行－易方達基金 臻選2號資產管理計劃)

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

47

VI.  CHANGES IN SHARES AND PARTICULARS OF SHAREHOLDERS (CONTINUED)

Top ten holders of shares not subject to selling restrictions
	Number of
	tradable shares	Class and number of shares
	held not subject to
Name of shareholder	selling restrictions	Class	Number
HKSCC NOMINEES LIMITED	379,467,000	Overseas listed foreign shares	379,467,000
BSAM (HK)	24,859,792	Overseas listed foreign shares	24,859,792
Beijing Huitai Hengrui	18,000,707	RMB ordinary shares	18,000,707
Investment Co.., Ltd..
Anhui Jianghuai Growth	14,970,043	RMB ordinary shares	14,970,043
Investment Fund Centre
(Limited Partnership)
(安徽省江淮成長投資基金中心
（有限合夥）)
Gongqingcheng Jingxiu	13,311,078	RMB ordinary shares	13,311,078
Investment Partnership
(Limited Partnership)
Zhongshang Longrun Huanke	7,429,630	RMB ordinary shares	7,429,630
Investment Co.., Ltd..
(中商龍潤環科投資有限公司)
Shanghai Zhonghui Jinjiu	4,440,119	RMB ordinary shares	4,440,119
Investment Co.., Ltd.. -
Poly Longma Hongli Equity
Investment Fund (Tianjin) Limited
Partnership (Limited Partnership)
(上海中匯金玖投資有限公司－
保利龍馬鴻利股權投資基金
（天津）合夥企業（有限合夥）)
Shenzhen Fuxiao Investment	2,630,000	RMB ordinary shares	2,630,000
Co.., Ltd..
(深圳市拂曉投資有限公司)
E Fund - Industrial and Commercial	2,304,439	RMB ordinary shares	2,304,439
Bank of China - E Fund No.. 2
Asset Management Plan
(易方達基金－工商銀行－易方達
基金臻選2號資產管理計劃)
Shenzhen Xiaoxi	2,095,000	RMB ordinary shares	2,095,000
Business Management

Consulting Co.., Ltd..

(深圳市曉溪企業管理諮詢 有限公司)

Particulars of related-party relationship or concert BSAM (HK) is a wholly-owned subsidiary of BSAM party arrangement among the Shareholders above

48	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

VI.  CHANGES IN SHARES AND PARTICULARS OF SHAREHOLDERS (CONTINUED)

Number of shares held by the top ten shareholders subject to selling restrictions and conditions of such selling restrictions

• Applicable  □ Not applicable

						Unit: share
				Listing and trading of restricted shares
					Number of
					shares
		Number of shares			permitted
		held subject		Time permitted	to be listed	Conditions
	Name of shareholders	to selling		to be listed and	and traded in	of selling
No.	subject to selling restrictions	restrictions		traded in the market	the market	restrictions
1	BSAM	501,189,618		10 June 2021	0	Undertaking
						in relation to
						restriction
						on selling of
						shares
Particulars of related-party relationship or concert	N/A
party arrangement among the Shareholders above

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

49

VI.  CHANGES IN SHARES AND PARTICULARS OF SHAREHOLDERS (CONTINUED)

1. Particulars of shareholding of substantial shareholders disclosed pursuant to the
   SFO

Save as disclosed in the section headed "Interests in securities held by Directors, Supervisors and senior management", as at 30 June 2020, according to the Register kept under Section 336 of the SFO, the following shareholders who had 5% or more interests or short positions in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provision of Divisions 2 and 3 of Part XV of the SFO:

				Approximate
			Approximate	percentage of
			percentage of	share holding
			share holding	in the
			in the	total share
	Number of		relevant class	capital of the
Shareholder	shares held	Capacity	of shares (1)	Company (2)
Beijing State-owned Assets	501,189,618	Beneficial owner	66..22	43..16
Management Co.., Ltd..	A shares
("BSAM") (4)	(Long position)
Beijing State-owned Assets	24,859,792	Beneficial owner	6..15	2..14
Management (Hong Kong)	H Shares
Company Limited	(Long position)
("BSAM (HK)") (3)
BSAM(3)	24,859,792	Interest in	6..15	2..14
	H Shares	controlled
	(Long position)	corporation
National Council for	28,293,000	Beneficial owner	6..99	2..44
Social Security Fund	H Shares
	(Long position)
Tenbagger Capital	40,350,000	Investment	9..98	3..47
Management CO..,LTD	H Shares	manager
	(Long position)

Notes:

1. The calculation is based on the number of Shares in the relevant class of shares of the Company as at 30 June 2020..
2. The calculation is based on the total number of 1,161,200,000 Shares in issue as at 30 June 2020..
3. BSAM (HK) is a wholly-owned subsidiary of BSAM.. Pursuant to the SFO, BSAM is deemed to be interested in the H Shares held by BSAM (HK), holding 24,859,792 H Shares, representing approximately 6..15% of the total H Shares of the Company and approximately 2..14% of the total share capital of the Company..
4. Pursuant to the BSAM Subscription Agreement dated 30 October 2019 and the supplemental agreement of the BSAM Subscription Agreement dated 29 May 2020, BSAM has conditionally agreed to subscribe for not less than 40% of the A shares to be issued under the proposed non-public issuance of A shares which in any case shall not be more than 133,000,000 A shares.. The issue price will be ultimately determined in accordance with the pricing terms as disclosed in the announcement dated 29 May 2020.. Upon completion of the proposed non-public issuance of A shares by BSAM, the total number of shares held by it will be 634,189,618 A shares, representing approximately 64..12% of the relevant class of shares..

50	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

VI.  CHANGES IN SHARES AND PARTICULARS OF SHAREHOLDERS (CONTINUED)

Apart from the above, as at 30 June 2020, no other interests required to be recorded in the Register kept under Section 336 of the SFO have been notified to the Company..

The non-executive directors of the Company, Mr.. Zhi Jun and Mr.. Cheng Suning are employees of entities under the BSAM group..

(IV) Strategic investors or general legal persons becoming the top 10 shareholders by placing of new shares

1. • Applicable  ✓ Not applicable
2. Changes in controlling shareholder or beneficial controllers
3. • Applicable  ✓ Not applicable

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

51

VII.  PREFERENCE SHARES

• Applicable  ✓ Not applicable

52	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

VIII.  DIRECTORS, SUPERVISORS AND SENIORMANAGEMENT

1. Changes in shareholding
2. 1. Changes in shareholding of the current and resigned Directors, Supervisors and senior management during the Reporting Period
      □ Applicable  ✓ Not applicable

Other explanations

1. □ Applicable  ✓ Not applicable

2. Interests in securities held by Directors, Supervisors and senior management (disclosure pursuant to the requirements of the Stock Exchange)

As at 30 June 2020, the interests and short positions of the Directors, supervisors (the "Supervisors") and the chief executives of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) (i) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) which were required, pursuant to section 352 of the SFO, to be entered in the register required to be kept by the Company; or (iii) which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the "Model Code") were as follows:

				Approximate
			Approximate	percentage of
			percentage of	shareholding
			shareholding	in the total
			in the relevant	share capital
	Number of		class of	of the
Director	shares held	Capacity	shares (1)	Company (2)
Mr.. Qiao Dewei (3)	13,311,078 A shares	Interest in controlled	1..76	1..15
	(Long position)	corporation

Notes:

1. The calculation is based on the number of Shares in the relevant class of shares of the Company as at 30 June 2020..
2. The calculation is based on the total number of 1,161,200,000 Shares in issue as at 30 June 2020..
3. Gongqingcheng Jingxiu Investment Partnership (Limited Partnership) ("Jingxiu Investment", originally known as Shenzhen Jingxiu Investment Partnership (Limited Partnership)) held 13,311,078 A shares, representing approximately 1..76% of the A shares and approximately 1..15% of the total share capital of the Company respectively.. As Mr.. Qiao Dewei is a general partner of Jingxiu Investment according to the partnership agreement of Jingxiu Investment, pursuant to the SFO, Mr.. Qiao Dewei is deemed to be interested in the A shares held by Jingxiu Investment..

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

53

VIII.  DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT (CONTINUED)

Apart from the above, none of the Directors, Supervisors and chief executives of the Company had any interests or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as at 30 June 2020 as recorded in the Register required to be kept under Section 352 of the SFO or which were required to be notified to the Company or the Hong Kong Stock Exchange pursuant to the Model Code..

Apart from the above, at no time during the period from 1 January 2020 to 30 June 2020 was the Company or its associated corporations (within the meaning of Part XV of the SFO) a party to any arrangement to enable the Directors, Supervisors or chief executives of the Company or any of their spouses or children under eighteen years of age to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate..

1. 1. Equity incentive granted to Directors, Supervisors and senior management during the Reporting Period
      □ Applicable  ✓ Not applicable
2. Changes in Directors, Supervisors and senior management of the Company

• Applicable  ✓ Not applicable

Explanation of changes in Directors, Supervisors and senior management of the Company

• Applicable  ✓ Not applicable

Changes in Director's biographical details

• Applicable  □ Not applicable

Mr.. Xie Lanjun, an independent non-executive Director of the Company, has served as an independent non executive director of Shenzhen Jinjia Group Co.., Ltd.. (stock code: 002191), a company listed on the Shenzhen Stock Exchange from May 2020..

1. Code of conduct for trading of shares by Directors, Supervisors and employees (disclosure pursuant to the requirements of the Stock Exchange)

The Company has adopted Management Measures on Securities Transactions by Directors, Supervisors and Senior Management Personnel (the "Management Measures") on terms no less exacting than the required standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") contained in Appendix 10 to the Listing Rules.. The Company had made specific inquiries to all of the Directors and Supervisors on whether they had complied with the Management Measures during the Reporting Period, and all of the Directors and Supervisors had confirmed that they had all complied with the Management Measures.. The Company has established the Employees Written Guidance (the "Employees Written Guidance") for its employees who may hold unpublished internal information of the Company in relation to dealing in securities, with terms no less favourable than the Model Code.. The Company was not aware of any matters in relation to breaches of the Employees Written Guidance by any employee..

54	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

VIII.  DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT (CONTINUED)

IV. Human resources and policies (disclosure pursuant to the requirements of the Stock Exchange)

As at 30 June 2020, the Group had a total of 2,518 staff members..

The Company provides remuneration with "competitiveness in the industry" to employees.. The Company has established a compensation management system based on "management by objectives and performance appraisal".. The remuneration of employees is linked to their completion of tasks assigned by the Company and performances.. The remuneration management of the Company follows the "model differentiation principle".. According to work needs, the Company implements four different compensation modes of "effective annual salary system, basic annual salary system, project salary system and basic monthly salary system" for different positions..

The Company will maintain the stability of the remuneration system, and will continue to improve on the basis of the implementation of current remuneration system in accordance with the actual situation of the Company.. The Company will make timely adjustments to the salary level of employees according to the operation situation, price index and industry salary level, so that the income level of employees will continue to be competitive..

The Group also provides systematic training.. By facilitating various kinds of training, including self-study, after- work training and on-the-job and off-the-job training, the Group educates its employees about its history, corporate culture, vision, business philosophy and basic rules, as well as its systems and operations management, environmental and safety issues, waste-to-energyknow-how, relevant laws and regulations as well as the Group's core technologies and production procedures.. In particular, the Group recruits recent graduates with high level of education from technical schools, secondary technical schools, colleges and universities and trains them through trainee mentoring programs so as to nurture a pool of reserve talent..

1. Other explanation
   □ Applicable  ✓ Not applicable

Dynagreen Environmental Protection Group Co.., Ltd.  Interim Report 2020

55

IX.  CORPORATE BONDS

• Applicable  ✓ Not applicable

56	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT

CONSOLIDATED BALANCE SHEET

(Expressed in Renminbi Yuan)

	Note	30 June 2020 31 December 2019
ASSETS
Current assets:
Cash at bank and on hand	V.. 1	673,777,588.10	432,140,938..55
Accounts receivable	V.. 2	566,333,766.23	452,783,629..70
Receivables under financing	V.. 3	12,400,000.00	10,036,291..46
Prepayments	V.. 4	29,092,740.38	15,355,672..33
Other receivables	V.. 5	36,922,963.22	22,779,939..42
Inventories	V.. 6	31,500,072.51	29,114,023..28
Contract assets	V.. 7	513,397,453.28	395,564,422..73
Long-term receivables due within one year	V.. 8	114,456,728.49	87,687,596..31
Other current assets	V.. 9	179,525,633.21	181,724,630..58
Total current assets		2,157,406,945.42	1,627,187,144..36
Non-current assets:
Long-term receivables	V.. 10	4,805,031,641.01	4,466,535,132..13
Long-term equity investments	V.. 11	62,066,022.09	62,907,982..84
Fixed assets	V.. 12	48,538,264.21	49,996,842..55
Right-of-use assets	V.. 51	969,605.37	1,464,901..09
Intangible assets	V.. 13	6,961,736,520.82	6,453,018,803..00
Goodwill	V.. 14	43,910,821.67	43,910,821..67
Long-term deferred expenses	V.. 15	415,205.14	581,287..19
Deferred tax assets	V.. 16	202,614,003.23	203,427,135..40
Other non-current assets	V.. 17	894,412,730.09	761,757,354..24
Total non-current assets		13,019,694,813.63	12,043,600,260..11
Total assets		15,177,101,759.05	13,670,787,404..47

The notes on pages 72 to 191 form part of these financial statements..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

57

X.  FINANCIAL REPORT (CONTINUED)

	Note	30 June 2020 31 December 2019
Liabilities and shareholders' equity
Current liabilities:
Short-term loans	V.. 18	3,327,151,573.62	2,433,082,965..96
Accounts payable	V.. 19	1,253,146,890.43	1,212,897,951..38
Contract liabilities	V.. 20	14,144,259.35	9,737,256..69
Employee benefits payable	V.. 21	38,712,185.51	85,954,559..07
Taxes payable	V.. 22	45,835,157.28	49,034,096..54
Other payables	V.. 23	110,838,804.31	149,645,055..37
Non-current liabilities due within one year	V.. 24	646,492,970.92	705,048,955..21
Total current liabilities		5,436,321,841.42	4,645,400,840..22
Non-current liabilities:
Long-term loans	V.. 25	5,591,958,365.43	5,057,022,246..80
Lease liabilities	V.. 51	650,666.10	554,586..70
Long-term payables	V.. 26	293,158,536.24	297,314,473..80
Deferred income	V.. 27	45,854,294.67	46,592,569..32
Deferred tax liabilities	V.. 16	139,906,755.42	127,386,997..96
Total non-current liabilities		6,071,528,617.86	5,528,870,874..58
Total liabilities		11,507,850,459.28	10,174,271,714..80

The notes on pages 72 to 191 form part of these financial statements..

58	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

	Note	30 June 2020 31 December 2019
Liabilities and shareholders' equity
(Continued)
Shareholders' equity:
Share capital	V.. 28	1,161,200,000.00	1,161,200,000..00
Capital reserve	V.. 29	859,074,607.53	859,074,607..53
Other comprehensive income	V.. 30	(9,458,372.31)	(8,121,791..15)
Surplus reserve	V.. 31	87,319,205.31	87,319,205..31
Retained earnings	V.. 32	1,329,369,591.92	1,196,756,895..66
Total equity attributable to
shareholders of the Company		3,427,505,032.45	3,296,228,917..35
Non-controlling interests		241,746,267.32	200,286,772..32
Total shareholders' equity		3,669,251,299.77	3,496,515,689..67
Total liabilities and shareholders' equity		15,177,101,759.05	13,670,787,404..47

These financial statements were approved by the Board of Directors of the Company on 28 August 2020..

Qiao Dewei	Hu Shengyong	Zhao Linbin	(Company stamp)
Authorised Representative	Chief Financial Officer	Chief Accountant
(Signature and stamp)	(Signature and stamp)	(Signature and stamp)

The notes on pages 72 to 191 form part of these financial statements..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

59

X.  FINANCIAL REPORT (CONTINUED)

COMPANY BALANCE SHEET

(Expressed in Renminbi Yuan)

	Note	30 June 2020 31 December 2019
ASSETS
Current assets:
Cash at bank and on hand		44,601,711.13	47,174,478..11
Accounts receivable	XV.. 1	99,761,045.49	75,971,673..15
Prepayments		669,915.49	71,288..95
Other receivables	XV.. 2	682,231,646.83	904,583,206..37
Long-term receivables due within one year		180,700,000.00	195,400,000..00
Other current assets		2,770,345.84	1,351,164..06
Total current assets		1,010,734,664.78	1,224,551,810..64
Non-current assets:
Long-term receivables	XV.. 3	288,339,200.00	463,320,000..00
Long-term equity investments	XV.. 4	5,190,155,873.12	4,726,940,333..87
Fixed assets		2,308,676.87	2,160,807..88
Right-of-use assets		-	510,805..36
Intangible assets		1,045,588.28	1,117,232..18
Deferred tax assets		1,046,102.56	938,062..23
Total non-current assets		5,482,895,440.83	5,194,987,241..52
Total assets		6,493,630,105.61	6,419,539,052..16

The notes on pages 72 to 191 form part of these financial statements..

60	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

Note	30 June 2020 31 December 2019
Liabilities and shareholders' equity
Current liabilities:
Short-term loans	3,252,808,416.65	2,415,000,000..00
Accounts payable	172,721.24	172,721..24
Advance payments received	-	-
Contract liabilities	26,474,576.27	10,000,000..00
Employee benefits payable	3,126,497.20	20,287,897..76
Taxes payable	2,612,169.46	449,290..11
Other payables	147,395,819.82	229,503,503..87
Non-current liabilities due within one year	104,733,525.28	253,828,192..74
Total current liabilities	3,537,323,725.92	2,929,241,605..72
Non-current liabilities:
Long-term loans	342,173,484.20	853,299,321..97
Total non-current liabilities	342,173,484.20	853,299,321..97
Total liabilities	3,879,497,210.12	3,782,540,927..69

The notes on pages 72 to 191 form part of these financial statements..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

61

X.  FINANCIAL REPORT (CONTINUED)

	Note	30 June 2020 31 December 2019
Liabilities and shareholders' equity (Continued)
Shareholders' equity:
Share capital	V.. 28	1,161,200,000.00	1,161,200,000..00
Capital reserve	XV.. 5	906,165,435.50	906,165,435..50
Surplus reserve	V.. 31	87,319,205.31	87,319,205..31
Retained earnings	XV.. 6	459,448,254.68	482,313,483..66
Total shareholders' equity		2,614,132,895.49	2,636,998,124..47
Total liabilities and shareholders' equity		6,493,630,105.61	6,419,539,052..16

These financial statements were approved by the Board of Directors of the Company on 28 August 2020..

Qiao Dewei	Hu Shengyong	Zhao Linbin	(Company stamp)
Authorised Representative	Chief Financial Officer	Chief Accountant
(Signature and stamp)	(Signature and stamp)	(Signature and stamp)

The notes on pages 72 to 191 form part of these financial statements..

62	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

CONSOLIDATED INCOME STATEMENT

(Expressed in Renminbi Yuan)

			January	January
		Note	to June 2020	to June 2019
I.	Operating income	V.. 33	1,011,128,651.22	795,270,932..19
	Less: Operating costs	V.. 33	436,329,282.57	369,381,701..88
	Taxes and surcharges	V.. 34	21,006,267.18	16,688,159..68
	General and administrative expenses	V.. 35	59,689,417.95	55,188,466..26
	Research and development expenses	V.. 36	2,304,519.88	4,591,001..76
	Financial expenses	V.. 37	197,855,721.26	151,796,172..26
	Including: Interest expenses		198,288,233.09	153,039,081..03
	Interest income		2,082,943.41	2,391,625..91
	Add: Other income	V.. 38	42,522,494.38	65,353,635..32
	Investment (losses)/income	V.. 39	(841,960.75)	785,496..06
	Including: (losses)/income from investment in
	joint ventures		(841,960.75)	6,939..13
	Credit losses	V.. 40	(31,964,599.13)	(18,197,638..51)
	Gains/(losses) from asset disposals	V.. 41	54,786.50	(25,424..58)
II.	Operating profit		303,714,163.38	245,541,498..64
	Add: Non-operating income	V.. 42	1,297,768.28	1,271,931..45
	Less: Non-operating expenses	V.. 42	1,161,690.01	303,874..59
III.	Profit before income tax		303,850,241.65	246,509,555..50
	Less: Income tax expenses	V.. 43	48,258,050.39	28,221,975..10
IV.	Net profit for the period		255,592,191.26	218,287,580..40
	Net profit attributable to shareholders of the Company		248,732,696.26	217,163,283..10
	Non-controlling interests		6,859,495.00	1,124,297..30

1. Other comprehensive income, net of tax
2. 1. Other comprehensive income (net of tax) attributable

to shareholders of the Company
Other comprehensive income to be reclassified into
profit or loss in the future
Translation differences arising from translation of
foreign currency financial statements	V.. 30	(1,336,581.16)	(24,078..21)

1. Other comprehensive income (net of tax) attributable

to non-controlling interests	-	-

The notes on pages 72 to 191 form part of these financial statements..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

63

X.  FINANCIAL REPORT (CONTINUED)

			January	January
		Note	to June 2020	to June 2019
VI.	Total comprehensive income for the period		254,255,610.10	218,263,502..19
	Total comprehensive income attributable to
	shareholders of the Company		247,396,115.10	217,139,204..89
	Total comprehensive income attributable to
	non-controlling interests		6,859,495.00	1,124,297..30
VII.	Earnings per share
	(I) Basic earnings per share	V.. 44	0.21	0..19
	(II) Diluted earnings per share	V.. 44	0.21	0..19

These financial statements were approved by the Board of Directors of the Company on 28 August 2020..

Qiao Dewei	Hu Shengyong	Zhao Linbin	(Company stamp)
Authorised Representative	Chief Financial Officer	Chief Accountant
(Signature and stamp)	(Signature and stamp)	(Signature and stamp)

The notes on pages 72 to 191 form part of these financial statements..

64	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

COMPANY INCOME STATEMENT

(Expressed in Renminbi Yuan)

			January	January
		Note	to June 2020	to June 2019
I.	Operating income	XV.. 7	32,167,841.67	57,492,523..91
	Less: Operating costs	XV.. 7	3,066,213.53	2,334,792..39
	Taxes and surcharges		94,162.77	219,759..04
	General and administrative expenses		15,068,614.80	15,396,184..71
	Research and development expenses		2,304,519.88	3,411,458..95
	Financial expenses		84,806,259.95	59,321,430..79
	Including: Interest expenses		83,091,059.63	59,148,454..99
	Interest income		1,070,499.86	965,353..48
	Add: Other income		799,853.34	266,733..02
	Investment income	XV.. 8	166,190,006.15	164,011,063..72
	Including: (losses)/income from investment in
	joint ventures		(841,960.75)	6,939..13
	Credit (loss)/reversal		(720,268.91)	695,383..51
	Gains from assets disposal		49,073.38	10,145..67
II.	Operating profit		93,146,734.70	141,792,223..95
	Add: Non-operating income		-	-
	Less: Non-operating expenses		4.01	-
III. Profit before income tax		93,146,730.69	141,792,223..95
	Less: Income tax expenses		(108,040.33)	37,609..58
IV.	Net profit for the period		93,254,771.02	141,754,614..37
V. Other comprehensive income, net of tax		-	-
VI.	Total comprehensive income for the period		93,254,771.02	141,754,614..37

These financial statements were approved by the Board of Directors of the Company on 28 August 2020..

Qiao Dewei	Hu Shengyong	Zhao Linbin	(Company stamp)
Authorised Representative	Chief Financial Officer	Chief Accountant
(Signature and stamp)	(Signature and stamp)	(Signature and stamp)

The notes on pages 72 to 191 form part of these financial statements..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

65

X.  FINANCIAL REPORT (CONTINUED)

CONSOLIDATED CASH FLOW STATEMENT

(Expressed in Renminbi Yuan)

		January	January
	Note	to June 2020	to June 2019

1. Cash flows from operating activities:
   Proceeds from sale of goods, rendering of services and

	the Build-Operate-Transfer ("BOT") projects	V.. 46(6)	886,931,758.48	651,536,342..56
	Refund of taxes		27,838,829.77	42,819,708..08
	Proceeds from other operating activities	V.. 46(1)	34,497,172.76	42,003,136..01
	Sub-total of cash inflows from operating activities		949,267,761.01	736,359,186..65
	Payment for goods and services		315,856,336.20	262,577,177..45
	Increase of principal of long-term receivables of
	BOT and BT projects	V.. 46(6)	327,027,548.15	331,814,674..09
	Payment to and for employees		181,349,067.42	157,286,015..56
	Payment of various taxes		104,344,822.73	78,953,020..35
	Payment for other operating activities	V.. 46(2)	49,948,435.20	31,195,356..49
	Sub-total of cash outflows for operating activities		978,526,209.70	861,826,243..94
	Net cash used in operating activities	V.. 47(1)(a)	(29,258,448.69)	(125,467,057..29)
II.	Cash flows from investing activities:
	Proceeds from disposal of an investment		-	3,500,000..00
	Net cash proceeds from disposal of fixed assets		260,627.64	130,675..27
	Proceeds from other investing activities	V.. 46(3)	-	38,659,040..04
	Sub-total of cash inflows		260,627.64	42,289,715..31
	Payment for acquisition of fixed assets,
	intangible assets and other long-term assets		746,802,207.44	942,594,623..86
	Payment for investments		-	37,816,510..20
	Payment for acquisition of subsidiaries	V.. 47(2)	11,332,500.00	202,363,030..05
	Payment for other investing activities	V.. 46(4)	21,000,000.00	20,000,000..00
	Sub-total of cash outflows		779,134,767.44	1,202,774,164..11
	Net cash used in investing activities		(778,874,139.80)	(1,160,484,448..80)

The notes on pages 72 to 191 form part of these financial statements..

66	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

		January	January
	Note	to June 2020	to June 2019

1. Cash flows from financing activities: 

	Proceeds from investors		34,600,000.00	57,000,000..00
	Including: Proceeds received from non-controlling
	shareholders of subsidiaries		34,600,000.00	57,000,000..00
	Proceeds from borrowings		2,363,295,176.16	1,706,938,526..51
	Sub-total of cash inflows		2,397,895,176.16	1,763,938,526..51
	Payment of borrowings		1,013,647,377.45	386,079,414..32
	Payment for dividends, profit distributions or interest		323,156,076.30	178,969,932..02
	Payment for other financing activities	V.. 46(5)	14,244,280.56	1,913,157..30
	Sub-total of cash outflows		1,351,047,734.31	566,962,503..64
	Net cash generated from financing activities		1,046,847,441.85	1,196,976,022..87
IV.	Effect of foreign exchange rate changes on cash		(78,203.81)	60,911..08
V.	Net increase/(decrease) in cash	V.. 47(1)(b)	238,636,649.55	(88,914,572..14)
	Add: Balance of cash at the beginning of the period		351,983,418.55	633,978,483..72
VI.	Balance of cash at the end of the period	V.. 47(1)(b)	590,620,068.10	545,063,911..58

These financial statements were approved by the Board of Directors on 28 August 2020..

Qiao Dewei	Hu Shengyong	Zhao Linbin	(Company stamp)
Authorised Representative	Chief Financial Officer	Chief Accountant
(Signature and stamp)	(Signature and stamp)	(Signature and stamp)

The notes on pages 72 to 191 form part of these financial statements..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

67

X.  FINANCIAL REPORT (CONTINUED)

COMPANY CASH FLOW STATEMENT

(Expressed in Renminbi Yuan)

			January	January
		Note	to June 2020	to June 2019
I.	Cash flows from operating activities:
	Proceeds from rendering of services		25,469,031.58	30,789,746..50
	Proceeds from other operating activities		32,622,445.14	28,557,798..47
	Sub-total of cash inflows from operating activities		58,091,476.72	59,347,544..97
	Payment for goods		1,437,701.60	2,970,605..66
	Payment to and for employees		30,527,271.26	29,486,636..45
	Payment of various taxes		148,687.78	3,392,224..98
	Payment for other operating activities		57,243,132.24	43,427,067..67
	Sub-total of cash outflows for operating activities		89,356,792.88	79,276,534..76
	Net cash used in operating activities	XV.. 9(1)(a)	(31,265,316.16)	(19,928,989..79)
II.	Cash flows from investing activities:
	Proceeds from disposal of an investment		-	3,500,000..00
	Investment returns received		117,700,000.00	54,629,600..60
	Net proceeds from disposal of fixed assets,
	intangible assets and other long-term assets		102,495.88	26,097..22
	Proceeds from other investing activities		936,866,235.89	229,126,244..40
	Sub-total of cash inflows from investing activities		1,054,668,731.77	287,281,942..22
	Payment for acquisition of fixed assets,
	intangible assets and other long-term assets		513,536.98	1,279,011..27
	Payment for investments		464,057,500.00	492,264,200..89
	Payment for acquisition of subsidiaries and
	other business units		11,332,500.00	202,863,280..00
	Payment for other investing activities		518,629,200.00	746,800,000..00
	Sub-total of cash outflows for investing activities		994,532,736.98	1,443,206,492..16
	Net cash generated from/(used in) investing activities		60,135,994.79	(1,155,924,549..94)

The notes on pages 72 to 191 form part of these financial statements..

68	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

			January	January
		Note	to June 2020	to June 2019
III.	Cash flows from financing activities:
	Proceeds from borrowings		935,000,000.00	1,188,000,000..00
	Sub-total of cash inflows from financing activities		935,000,000.00	1,188,000,000..00
	Repayment of borrowings		767,040,576.72	96,027,830..67
	Payment for distribution of profit or payment of interests		201,430,194.27	80,978,744..35
	Payment for other financing activities		1,995,353.22	1,475,761..90
	Sub-total of cash outflows for financing activities		970,466,124.21	178,482,336..92
	Net cash (used in)/generated from financing activities		(35,466,124.21)	1,009,517,663..08
IV.	Effect of foreign exchange rate changes on cash		22,678.60	47..66
V.	Net decrease in cash	XV.. 9(1)(b)	(6,572,766.98)	(166,335,828..99)
	Add: Balance of cash at the beginning of the period		35,174,478.11	271,810,049..42
VI.	Balance of cash at the end of the period	XV.. 9(2)	28,601,711.13	105,474,220..43

These financial statements were approved by the Board of Directors of the Company on 28 August 2020..

Qiao Dewei	Hu Shengyong	Zhao Linbin	(Company stamp)
Authorised Representative	Chief Financial Officer	Chief Accountant
(Signature and stamp)	(Signature and stamp)	(Signature and stamp)

The notes on pages 72 to 191 form part of these financial statements..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

69

X.  FINANCIAL REPORT (CONTINUED)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(Expressed in Renminbi Yuan)

Equity attributable to shareholders of the Company

Other

Non-

Total

Note

Share

Capital

comprehensive

Surplus

Retained

controlling

shareholders'

capital

reserve

income

reserve

earnings

Sub-total

interests

equity

I.

Balance at 1 January 2020

1,161,200,000.00

859,074,607.53

(8,121,791.15)

87,319,205.31

1,196,756,895.66

3,296,228,917.35

200,286,772.32

3,496,515,689.67

II.

Changes in equity during

the period

(I)

Total comprehensive

income

V.. 32

-

-

(1,336,581.16)

-

248,732,696.26

247,396,115.10

6,859,495.00

254,255,610.10

(II)

Shareholders' contribution

• Ordinary shares contributed by

shareholders- - - - - - 34,600,000.00 34,600,000.00

(III) Profit distribution

• Distributions to

		shareholders	V.. 32	-	-	-	-	(116,120,000.00)	(116,120,000.00)	-	(116,120,000.00)
III.. Balance at 30 June 2020		1,161,200,000.00	859,074,607.53	(9,458,372.31)	87,319,205.31	1,329,369,591.92	3,427,505,032.45	241,746,267.32	3,669,251,299.77
					Equity attributable to shareholders of the Company
										Non-	Total
						Other
				Share	Capital	comprehensive	Surplus	Retained		controlling	shareholders'
			Note	capital	reserve	income	reserve	earnings	Sub-total	interests	equity
I.	Balance at 1 January 2019		1,161,200,000..00	858,803,441..83	(8,118,159..45)	71,532,851..40	912,574,775..97	2,995,992,909..75	76,604,214..95	3,072,597,124..70
II.	Changes in equity during
	the period
	(I)	Total comprehensive
		income	V.. 32	-	-	(24,078..21)	-	217,163,283..10	217,139,204..89	1,124,297..30	218,263,502..19
	(II)	Shareholders' contribution		-

1. Ordinary shares contributed by

	shareholders		-	-	-	-	-	-	57,000,000..00	57,000,000..00
2.	Others		-	(2,693..36)	-	-	-	(2,693..36)	2,693..36	-
(III) Profit distribution
－ Distributions to
	shareholders	V.. 32	-	-	-	-	(116,120,000..00)	(116,120,000..00)	-	(116,120,000..00)
III. Balance at 30 June 2019		1,161,200,000..00	858,800,748..47	(8,142,237..66)	71,532,851..40	1,013,618,059..07	3,097,009,421..28	134,731,205..61	3,231,740,626..89

These financial statements were approved by the Board of Directors of the Company on 28 August 2020..

Qiao Dewei	Hu Shengyong	Zhao Linbin	(Company stamp)
Authorised Representative	Chief Financial Officer	Chief Accountant
(Signature and stamp)	(Signature and stamp)	(Signature and stamp)

The notes on pages 72 to 191 form part of these financial statements..

70	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(Expressed in Renminbi Yuan)

					Undistributed
	Note	Share capital	Capital reserve	Surplus reserve	profits	Total
I.	Balance at 1 January 2020	1,161,200,000.00	906,165,435.50	87,319,205.31	482,313,483.66	2,636,998,124.47

1. Changes for the period

	(I)	Total comprehensive income	XV..6	-	-	-	93,254,771.02	93,254,771.02
	(II)	Shareholders' contribution		-	-	-	-	-
	(III)	Profit distribution
		- Distributions to shareholders	XV..6	-	-	-	(116,120,000.00)	(116,120,000.00)
III.	Balance at 30 June 2020		1,161,200,000.00	906,165,435.50	87,319,205.31	459,448,254.68	2,614,132,895.49
							Undistributed
			Note	Share capital	Capital reserve	Surplus reserve	profits	Total
I.	Balance at 1 January 2019		1,161,200,000..00	906,165,435..50	71,532,851..40	456,356,298..47	2,595,254,585..37

1. Changes for the period

(I)	Total comprehensive income	XV..6	-	-	-	141,754,614..37	141,754,614..37
(II)	Shareholders' contribution		-	-	-	-	-
(III)	Profit distribution
	- Distributions to shareholders	XV..6	-	-	-	(116,120,000..00)	(116,120,000..00)
III. Balance at 30 June 2019		1,161,200,000..00	906,165,435..50	71,532,851..40	481,990,912..84	2,620,889,199..74

These financial statements were approved by the Board of Directors of the Company on 28 August 2020..

	Qiao Dewei		Hu Shengyong		Zhao Linbin		(Company stamp)
Authorised Representative	Chief Financial Officer		Chief Accountant
	(Signature and stamp)	(Signature and stamp)		(Signature and stamp)

The notes on pages 72 to 191 form part of these financial statements..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

71

X.  FINANCIAL REPORT (CONTINUED)

NOTES TO FINANCIAL STATEMENTS

(Expressed in Renminbi unless otherwise indicated)

1. COMPANY OVERVIEW

Dynagreen Environmental Protection Group Co.., Ltd.. (the "Company") is a joint-stock limited liability company established based on the reorganisation of Shenzhen Dynagreen Environmental Engineering Co.., Ltd.. (深圳綠色動 力環境工程有限公司) on 23 April 2012.. Its registered address is 2nd Floor, Northeastern Wing, Jiuzhou Electronic Building, 007 Keji South 12th Street, Nanshan District, Shenzhen, the People's Republic of China (the "PRC").. Its head office is located in Shenzhen, Guangdong Province, the PRC.. The parent company and ultimate holding company of the Company is Beijing State-owned Assets Management Co.., Ltd.. ("BSAM")..

On 19 June 2014, the Company was listed on the Hong Kong Stock Exchange.. On 29 June 2014, the underwriter of the Company of the public offering project on the Hong Kong Stock Exchange exercised all of the overallotment options stated in the Company's prospectus dated 9 June 2014..

As approved by the Approval in Relation to the Initial Public Offering of Dynagreen Environmental Protection Group Co.., Ltd.. (Zheng Jiang Xu Ke [2018] No.. 746)《( 關於核准綠色動力環保集團股份有限公司首次公開發行 股票的批覆》(證監許可[2018]746號)) issued by the China Securities Regulatory Commission (the "CSRC"), the Company issued not more than 116,200,000 ordinary shares (A shares) under the initial public offering on 23 April 2018.. Under the offering, the actual size of the public offering was 116,200,000..00 RMB ordinary shares with a nominal value of RMB1 per share, increasing the share capital by RMB116,200,000..00.. Upon the public offering of A shares, the paid-in capital (share capital) of the Company amounted to RMB1,161,200,000..00 comprising a total of 1,161,200,000..00 shares..

The Company and its subsidiaries (the "Group") are principally engaged in technological research in environmental protection industries including waste-incineration, and the design, development and systematic integration of relevant equipment, as well as management of waste treatment projects, operation management and the provision of technological services and associated technological consultation..

For the information about the subsidiaries and new subsidiaries of the Group during the Reporting Period, please refer to Notes VI and VII..

72	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. BASIS OF PREPARATION
   1. Basis of preparation

These financial statements were prepared in accordance with the Accounting Standards for Business Enterprises No.. 32 - Interim Financial Reporting issued by the Ministry of Finance of the PRC (the "MOF")..

In addition, these financial statements also included the relevant disclosure in accordance with the disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited..

Save as the changes in the accounting policies as disclosed in Note III..30, the accounting policies adopted in the preparation of these financial statements are consistent with those adopted in preparation of the 2019 financial statements of the Group.. These financial statements shall be read in conjunction with the 2019 financial statements of the Group..

2. Going concern

At 30 June 2020, the net current liabilities of the Group amounted to RMB3,278,914,896..00, including short- term loans from Beijing State-owned Asset Management Co.., Ltd.. ("BSAM") amounted to approximately RMB3,158,709,041..65, and the committed capital expenditure within one year of the Group amounted to approximately RMB1,652,990,346..69, which lead to certain liquidity risk..

The management of the Group intend to take the following measures to ensure the Group has sufficient financial resources to meet its operation requirement for the coming 12 months:

1. The Group maintained good long-term business relationship with various financial institutions, so as to ensure that it can obtain adequate lines of credit from them.. At 30 June 2020, the available banking facilities of the Group amounted to RMB4,843,116,011..67..
2. With the constant completion and commencement of operations of the new waste-to-energy projects, the management foresees that the Group will generate stable cash inflow from future operating activities to meet its liquidity requirement..

In view of the above factors, the management is of the opinion that, the Group will have sufficient working capital to meet its operation requirement for the next twelve months from 1 July 2020, and thus the management believes that the Group's preparation of the financial statements on a going concern basis is appropriate..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

73

X.  FINANCIAL REPORT (CONTINUED)

III. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

Accounting policies for the recognition and measurement of provisions for receivables, amortisation of intangible assets, and revenue recognition and measurement of the Group are adopted according to the specific characteristics of the Group's operations.. Please refer to the relevant notes on accounting policies..

1. Statement of compliance

These financial statements have been prepared in accordance with the requirements of the Accounting Standards for Business Enterprises, and present truly and completely the consolidated financial position and financial position of the Company as at 30 June 2020, and the consolidated financial performance and financial performance and the consolidated cash flows and cash flows of the Company for the six months from 1 January 2020 to 30 June 2020..

2. Accounting period

The accounting period is from 1 January to 31 December..

3. Operating cycle

The Group is engaged in the investment, construction and operation of waste-to-energy (WTE) plants treating solid waste.. The operating cycle of the Group for the operation of WTE plants which including processing of waste and power generation is usually less than 12 months..

4. Functional currency

The Company's functional currency is Renminbi and these financial statements are presented in Renminbi.. Functional currency is determined by the Company and its subsidiaries on the basis of the currency in which major income and costs are denominated and settled.. Some of the Company's subsidiaries have functional currencies that are different from the Company's functional currency.. Their financial statements have been translated based on the accounting policy set out in Note III..8..

74	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)

5. Accounting treatments for business combinations involving entities under common control and not under common control

For the transaction that the Group obtains the control over one or more companies (a group of assets or net assets) which constitutes a business, the transaction or matter constitutes a business combination.. Business combinations are divided into business combinations involving entities under common control and not under common control..

For business combinations not under common control, the acquirer will consider whether to adopt the simplified judgment method of "concentration test" when judging whether the acquired production and operation activities or the combination of assets constitute a business.. If the combination passes the concentration test, it does not constitute a business.. If the combination fails the concentration test, the judgment shall be made according to business conditions..

If the Group obtains a group of assets or net assets which does not constitute a business, the Group shall allocate the acquisition costs based on the relative fair values of the acquired identifiable assets and liabilities on the acquisition date, rather than account for it with the following accounting treatment methods for business combinations..

(1) Business combination involving entities under common control

A business combination involving entities under common control is a business combination in which all of the combining entities are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory.. The assets acquired and liabilities assumed are measured based on their carrying amounts in the consolidated financial statements of the ultimate controlling party at the combination date.. The difference between the carrying amount of the net assets acquired and the consideration paid for the combination (or the total par value of shares issued) is adjusted against share premium in the capital reserve, with any excess adjusted against retained earnings.. Any costs directly attributable to the combination are recognised in profit or loss when incurred.. The combination date is the date on which one combining entity obtains control of other combining entities..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

75

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   5. Accounting treatments for business combinations involving entities under common control and not under common control (Continued)

(2) Business combination involving entities not under common control

A business combination involving entities not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties both before and after the business combination.. Where (1) the aggregate of the acquisition-date fair value of assets transferred (including the acquirer's previously held equity interest in the acquiree), liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for control of the acquiree, exceeds (2) the acquirer's interest in the acquisition-date fair value of the acquiree's identifiable net assets, the difference is recognised as goodwill.. If (1) is less than (2), the difference is recognised in profit or loss for the current period.. Other acquisition-related costs are expensed when incurred.. The acquiree's identifiable assets, liabilities and contingent liabilities, if the recognition criteria are met, are recognised by the Group at their acquisition-date fair value.. The acquisition date is the date on which the acquirer obtains control of the acquiree..

For a business combination involving entities not under common control and achieved in stages, the Group remeasures its previously-held equity interest in the acquiree to its acquisition-date fair value and recognises any resulting difference between the fair value and the carrying amount as investment income for the current period.. Any amount recognised in other comprehensive income that may be reclassified to profit or loss, in prior reporting periods relating to the previously-held equity interest, and any other changes in the owners' equity under equity accounting, are transferred to investment income at the date when the acquisition occurs..

6. Preparation of consolidated financial statements

(1) General principles

The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Company and its subsidiaries.. Control exists when the investor has all of following: power over the investee; exposure, or rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.. When assessing whether the Group has power, only substantive rights (held by the Group and other parties) are considered.. The financial position, financial performance and cash flows of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases..

Non-controlling interests are presented separately in the consolidated balance sheet within shareholders' equity.. Net profit or loss attributable to non-controlling shareholders is presented separately in the consolidated income statement below the net profit line item.. Total comprehensive income attributable to non-controlling shareholders is presented separately in the consolidated income statement below the total comprehensive income line item..

When the amount of loss for the current period attributable to the non-controlling shareholders of a subsidiary exceeds the non-controlling shareholders' share of the opening owners' equity of the subsidiary, the excess is still allocated against the non-controlling interests..

76	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   6. Preparation of consolidated financial statements (Continued)

(1) General principles (Continued)

When the accounting period or accounting policies of a subsidiary are different from those of the Company, the Company makes necessary adjustments to the financial statements of the subsidiary based on the Company's own accounting period or accounting policies.. Intra-group balances and transactions, and any unrealised profit or loss arising from intra-group transactions, are eliminated when preparing the consolidated financial statements.. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains, unless they represent impairment losses that are recognised in the financial statements..

(2) Subsidiaries acquired through a business combination

Where a subsidiary was acquired during the Reporting Period, through a business combination involving entities under common control, the financial statements of the subsidiary are included in the consolidated financial statements based on the carrying amounts of the assets and liabilities of the subsidiary in the financial statements of the ultimate controlling party as if the combination had occurred at the date that the ultimate controlling party first obtained control.. The opening balances and the comparative figures of the consolidated financial statements are also restated..

Where a subsidiary was acquired during the Reporting Period, through a business combination involving entities not under common control, the identifiable assets and liabilities of the acquired subsidiaries are included in the scope of consolidation from the date that control commences, based on the fair value of those identifiable assets and liabilities at the acquisition date..

(3) Disposal of subsidiaries

When the Group loses control over a subsidiary, any resulting disposal gains or losses are recognised as investment income for the current period.. The remaining equity interests is re-measured at its fair value at the date when control is lost, any resulting gains or losses are also recognised as investment income for the current period..

(4) Changes in non-controlling interests

Where the Company acquires a non-controlling interest from a subsidiary's non-controlling shareholders or disposes of a portion of an interest in a subsidiary without a change in control, the difference between the proportion interests of the subsidiary's net assets being acquired or disposed and the amount of the consideration paid or received is adjusted to the capital reserve (share premium) in the consolidated balance sheet, with any excess adjusted to retained earnings..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

77

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   7. Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits that can be readily withdraw on demand, and short-term, highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of change in value..

8. Foreign currency transactions and translation of foreign currency financial statements

When the Group receives capital in foreign currencies from investors, the capital is translated to Renminbi at the spot exchange rate at the date of the receipt.. Other foreign currency transactions are, on initial recognition, translated to Renminbi at the rates that approximate the spot exchange rates on the dates of the transactions.. A rate that approximates the spot exchange rate is an average exchange rate of the current period determined under a systematic and rational method that approximates the spot exchange rate on the dates of the transactions..

Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange rate at the balance sheet date.. The resulting exchange differences are generally recognised in profit or loss, unless they arise from the re-translation of the principal and interest of specific borrowings for the construction of qualifying assets (see Note III..13).. Non-monetary items that are measured at historical cost in foreign currencies are translated to Renminbi using the spot exchange rate at the transaction date..

In translating the financial statements of a foreign operation, assets and liabilities of foreign operation are translated to Renminbi at the spot exchange rate at the balance sheet date.. Equity items, excluding retained earnings and the translation differences in other comprehensive income, are translated to Renminbi at the spot exchange rates at the transaction dates.. Income and expenses of foreign operation are translated to Renminbi at the rates that approximate the spot exchange rates at the transaction dates.. The resulting translation differences are recognised in other comprehensive income.. The translation differences accumulated in other comprehensive income with respect to a foreign operation are transferred to profit or loss in the period when the foreign operation is disposed..

78	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   9. Financial instruments

Financial instruments of the Group include cash at bank and on hand, accounts receivable, accounts payable, loans and share capital..

(1) Recognition and initial measurement of financial assets and financial liabilities

A financial asset or financial liability is recognised in the balance sheet when the Group becomes a party to the contractual provisions of a financial instrument..

A financial assets (unless it is a trade receivable without a significant financing component) and financial liabilities is measured initially at fair value.. For financial assets or financial liabilities at fair value through profit or loss, any related directly attributable transaction costs are directly charged to profit or loss; for other categories of financial assets or financial liabilities, any related directly attributable transaction costs are included in their initial costs.. A trade receivable without a significant financing component is initially measured at the transaction price according to the Note III..19..

1. Classification and subsequent measurement of financial assets
2. 1. Classification of financial assets
      The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.. On initial recognition, a financial asset is classified as measured at amortised cost, at fair value through other comprehensive income ("FVOCI"), or at fair value through profit or loss ("FVTPL")..
      Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first Reporting Period following the change in the business model..
      A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
   2. • it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
      • its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding..

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

79

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   9. Financial instruments (Continued)
2. 1. Classification and subsequent measurement of financial assets (Continued)
   2. 1. Classification of financial assets (Continued)
         On initial recognition of an equity investment that is not held for trading, the Group may irrevocably designate it as financial assets at FVOCI.. This election is made on an investment-by- investment basis.. The instrument meets the definition of equity from the perspective of the issuer..
         All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL.. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise..
         The business model refers to how the Group manages its financial assets in order to generate cash flows.. That is, the Group's business model determines whether cash flows of the financial assets managed will result from collecting contractual cash flows, selling financial assets or both.. The Group determines the business model for managing the financial assets according to the facts and based on the specific business objective for managing the financial assets determined by the Group's key management personnel..
         In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument.. For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition.. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.. The Group also assesses whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition..
         The Group does have neither financial assets at FVOCIT nor at FVTPL during the Reporting Period, and only holds financial asset measured at amortised cost..
      2. Subsequent measurement of financial assets
      3. • Financial assets at amortised cost
           These assets are subsequently measured at amortised cost using the effective interest method.. A gain or loss on a financial asset that is measured at amortised cost and is not part of a hedging relationship shall be recognised in profit or loss when the financial asset is derecognised, through the amortisation process or in order to recognise impairment gains or losses..

80	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   9. Financial instruments (Continued)

(3) Classification and subsequent measurement of financial liabilities

Financial liabilities are classified as measured at FVTPL or amortised cost

1. • Financial liabilities at FVTPL
     A financial liability is classified as at FVTPL if it is classified as held-for-trading (including derivative financial liability) or it is designated as such on initial recognition..
     Financial liabilities at FVTPL are subsequently measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss, unless the financial liabilities are part of a hedging relationship..
   • Financial liabilities at amortised cost
     Other financial liabilities are subsequently measured at amortised cost using the effective interest method..
     The Group does not have financial liability at FVTPL during the Reporting Period, and only holds financial liability measured at amortised cost..
2. Offsetting

Financial assets and financial liabilities are generally presented separately in the balance sheet, and are not offset.. However, a financial asset and a financial liability are offset and the net amount is presented in the balance sheet when both of the following conditions are satisfied:

• the Group currently has a legally enforceable right to set off the recognised amounts;
• the Group intends either to settle on a net basis, or to realise the financial asset and settle the financial liability simultaneously..

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X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   9. Financial instruments (Continued)

(5) Derecognition of financial assets and financial liabilities

Financial asset is derecognised when one of the following conditions is met:

• the Group's contractual rights to the cash flows from the financial asset expire;
• the financial asset has been transferred and the Group transfers substantially all of the risks and rewards of ownership of the financial asset; or
• the financial asset has been transferred, although the Group neither transfers nor retains substantially all of the risks and rewards of ownership of the financial asset, it does not retain control over the transferred asset..

Where a transfer of a financial asset in its entirety meets the criteria for derecognition, the difference between the two amounts below is recognised in profit or loss:

• the carrying amount of the financial asset transferred measured at the date of derecognition;
• the sum of the consideration received from the transfer and, when the transferred financial asset is a debt investment at FVOCI, any cumulative gain or loss that has been recognised directly in other comprehensive income for the part derecognised..

The Group derecognises a financial liability (or part of it) only when its contractual obligation (or part of it) is extinguished..

82	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   9. Financial instruments (Continued)

(6) Impairment

The Group recognises loss allowances for expected credit loss (ECL) on financial assets and contract assets measured at amortised cost:

Measurement of ECLs

ECLs are a probability-weighted estimate of credit losses.. Credit losses are measured as the present value of all cash shortfalls (i..e.. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive)..

The maximum period considered when estimating ECLs is the maximum contractual period (including extension options) over which the Group is exposed to credit risk..

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument..

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the balance sheet date (or a shorter period if the expected life of the instrument is less than 12 months)..

Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.. ECLs on these financial assets are estimated using a provision matrix based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors and an assessment of both the current and forecast general economic conditions at the balance sheet date..

Except for trade receivables and contract assets, the Group measures loss allowance at an amount equal to 12-month ECL for the following financial instruments, and at an amount equal to lifetime ECL for all other financial instruments..

• If the financial instrument is determined to have low credit risk at the balance sheet date; or
• If the credit risk on a financial instrument has not increased significantly since initial recognition..

Financial instruments that have low credit risk

The credit risk on a financial instrument is considered low if the financial instrument has a low risk of default, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations..

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83

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   9. Financial instruments (Continued)

(6) Impairment (Continued)

Significant increases in credit risk

In assessing whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group compares the risk of default occurring on the financial instrument assessed at the balance sheet date with that assessed at the date of initial recognition..

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort, including forward-looking information.. In particular, the following information is taken into account:

• failure to make payments of principal or interest on their contractually due dates;
• an actual or expected significant deterioration in a financial instrument's external or internal credit rating (if available);
• an actual or expected significant deterioration in the operating results of the debtor; and
• existing or forecast changes in the technological, market, economic or legal environment that have a significant adverse effect on the debtor's ability to meet its obligation to the Group..

Depending on the nature of the financial instruments, the assessment of a significant increase in credit risk is performed on either an individual basis or a collective basis.. When the assessment is performed on a collective basis, the financial instruments are grouped based on shared credit risk characteristics, such as past due status and credit risk ratings..

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due..

The Group considers a financial asset to be in default when:

• the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held)..

84	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   9. Financial instruments (Continued)

(6) Impairment (Continued)

Credit-impaired financial assets

At each balance sheet date, the Group assesses whether financial assets carried at amortised cost are credit-impaired.. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.. Evidence that a financial asset is credit impaired includes the following observable data:

• significant financial difficulty of the borrower or issuer;
• a breach of contract, such as a default or delinquency in interest or principal payments;
• for economic or contractual reasons relating to the borrower's financial difficulty, the Group having granted to the borrower a concession that would not otherwise consider;
• it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
• the disappearance of an active market for that financial asset because of financial difficulties..

Presentation of allowance for ECL

ECLs are remeasured at each balance sheet date to reflect changes in the financial instrument's credit risk since initial recognition.. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss.. The Group recognises an impairment gain or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for debt investments that are measured at FVOCI, for which the loss allowance is recognised in other comprehensive income..

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.. A write-off constitutes a derecognition event.. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due..

Subsequent recoveries of an asset that was previously written off are recognised as a reversal of impairment in profit or loss in the period in which the recovery occurs..

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X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   9. Financial instruments (Continued)

(7) Equity instrument

The consideration received from the issuance of equity instruments net of transaction costs is recognised in shareholders' equity.. Consideration and transaction costs paid by the Company for repurchasing self - issued equity instruments are deducted from shareholders' equity..

10. Inventories

1. Classification and cost

Inventories are mainly turnover materials.. Turnover materials include low-value consumables, packaging materials and other materials, which can be used repeatedly but do not meet the definition of fixed assets..

Inventories are initially measured at cost.. Cost of inventories comprises costs of purchase, costs of conversion and other expenditure incurred in bringing the inventories to their present location and condition..

(2) Measurement method of cost of inventories

Cost of inventories recognised is calculated using the weighted average method on a monthly basis..

Turnover materials including low-value consumables and packaging materials are amortised when they are used.. The amortisation charge is included in the cost of the related assets or recognised in profit or loss for the current period..

(3) Basis for determining the net realisable value and method for provision for obsolete inventories

At the balance sheet date, inventories are carried at the lower of cost and net realisable value..

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale and relevant taxes.. The net realisable value of materials held for use in the production is measured based on the net realisable value of the finished goods in which they will be incorporated.. The net realisable value of the inventory held to satisfy sales or service contracts is measured based on the contract price, to the extent of the quantities specified in sales contracts, and the excess portion of inventories is measured based on general selling prices..

Any excess of the cost over the net realisable value of each item of inventories is recognised as a provision for obsolete inventories, and is recognised in profit or loss..

(4) Inventory count system

The Group maintains a periodic inventory system..

86	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   11. Long-term equity investments
2. 1. Investment cost of long-term equity investments
   2. 1. Long-termequity investments acquired through a business combination
      2. • The initial cost of a long-term equity investment acquired through a business combination involving entities under common control is the Company's share of the carrying amount of the subsidiary's equity at the combination date.. The difference between the initial investment cost and the carrying amount of the consideration given is adjusted to the share premium in the capital reserve, with any excess adjusted to retained earnings..
         • For a long-term equity investment obtained through a business combination not involving entities under common control, the initial cost comprises the aggregate of the fair value of assets transferred, liabilities incurred or assumed, and equity securities issued by the Company, in exchange for control of the acquiree..
      3. Long-termequity investments acquired other than through a business combination
         A long-term equity investment acquired other than through a business combination is initially recognised at the amount of cash paid if the Group acquires the investment by cash..
   3. Subsequent measurement of long-term equity investment
   4. 1. Investments in subsidiaries
         In the Company's separate financial statements, long-term equity investments in subsidiaries are accounted for using the cost method for subsequent measurement.. Except for cash dividends or profit distributions declared but not yet distributed that have been included in the price or consideration paid in obtaining the investments, the Company recognises its share of the cash dividends or profit distributions declared by the investee as investment income for the current period..
         The investments in subsidiaries are stated in the balance sheet at cost less accumulated impairment losses..
         For the impairment of the investments in subsidiaries, refer to Note III..17..
         In the Group's consolidated financial statements, subsidiaries are accounted for in accordance with the policies described in Note III..6..

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87

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   11. Long-term equity investments (Continued)
2. 1. Subsequent measurement of long-term equity investment (Continued)
   2. 1. Investment in joint ventures
         A joint venture is an arrangement whereby the Group and other parties have joint control (see Note III..11(3)) and rights to the net assets of the arrangement..
         An investment in a joint venture is accounted for using the equity method for subsequent measurement..
         The accounting treatments under the equity method adopted by the Group are as follows:
      2. • Where the initial cost of a long-term equity investment exceeds the Group's interest in the fair value of the investee's identifiable net assets at the date of acquisition, the investment is initially recognised at cost.. Where the initial investment cost is less than the Group's interest in the fair value of the investee's identifiable net assets at the date of acquisition, the investment is initially recognised at the investor's share of the fair value of the investee's identifiable net assets, and the difference is recognised in profit or loss..
         • After the acquisition of the investment, the Group recognises its share of the investee's net profit or loss and other comprehensive income as investment income or losses and other comprehensive income respectively, and adjusts the carrying amount of the investment accordingly.. Once the investee declares any cash dividends or profit distributions, the carrying amount of the investment is reduced by the amount attributable to the Group..
         • In calculating its share of the investee's net profits or losses, other comprehensive income and other changes in owners' equity, the Group recognises investment income and other comprehensive income after making appropriate adjustments to align the accounting policies or accounting periods with those of the Group based on the fair value of the investee's identifiable net assets at the date of acquisition.. Unrealised profits and losses resulting from transactions between the Group and its joint ventures are eliminated to the extent of the Group's interest in the associates.. Unrealised losses resulting from transactions between the Group and its joint ventures are eliminated in the same way as unrealised gains but only to the extent that there is no impairment..
         • The Group discontinues recognising its share of further losses of the investee after the carrying amount of the long-term equity investment and any long-term interest that in substance forms part of the Group's net investment in the joint venture is reduced to zero, except to the extent that the Group has an obligation to assume additional losses.. If the joint venture subsequently reports net profits, the Group resumes recognising its share of those profits only after its share of the profits has fully covered the share of losses not recognised..

For the impairment test and provisioning of the investments in a joint venture, refer to Note III..17..

88	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   11. Long-term equity investments (Continued)

(3) Criteria for determining the existence of joint control over an investee

Joint control is the agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities (activities with significant impact on the returns of the arrangement) require unanimous consent of the parties sharing control..

The following factors are usually considered when assessing whether the Group can exercise joint control over an investee:

• Whether no single participant party is in a position to control the investee's relevant activities unilaterally;
• Whether strategic decisions relating to the investee's relevant activities require the unanimous consent of all the parties sharing control..

12. Fixed assets

1. Recognition of fixed assets

Fixed assets represent the tangible assets held by the Group for use in production of goods, for use in supply of services or for administrative purposes with useful lives over one accounting year..

The initial cost of a purchased fixed asset comprises the purchase price, related taxes, and any attributable expenditure for bringing the asset to working condition for its intended use..

Where the parts of an item of fixed assets have different useful lives or provide economic benefits to the Group in a different pattern, thus necessitating use of different depreciation rates or methods, each part is recognised as a separate fixed asset..

Any subsequent costs including the cost of replacing part of an item of fixed assets are recognised as assets when it is probable that the economic benefits associated with the costs will flow to the Group, and the carrying amount of the replaced part is derecognised.. The costs of the day-to-day maintenance of fixed assets are recognised in profit or loss as incurred..

Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment losses..

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X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   12. Fixed assets (Continued)

(2) Depreciation of fixed assets

The cost of a fixed asset, less its estimated residual value and accumulated impairment losses, is depreciated using the straight-line method over its useful life..

The useful lives, residual value rates and depreciation rates of each class of fixed assets are as follows:

	Estimated useful	Residual value	Depreciation
Class	life (years)	rate (%)	rate (%)
Motor vehicles	5-10 years	5%	9..50% - 19..00%
Office and other equipment	5 years	5%	19..00%
Buildings and structures	20 years	5%	4..75%

Useful lives, estimated residual values and depreciation methods are reviewed at least at each year- end..

1. For the impairment of the fixed assets, please refer to Note III.17.
2. Disposal of fixed assets

The carrying amount of a fixed asset is derecognised:

• when the fixed asset is holding for disposal;
• when no future economic benefit is expected to be generated from its use or disposal..

Gains or losses arising from the retirement or disposal of an item of fixed asset are determined as the difference between the net disposal proceeds and the carrying amount of the item, and are recognised in profit or loss on the date of retirement or disposal..

90	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   13. Borrowing costs

Borrowing costs incurred directly attributable to the acquisition and construction of a qualifying asset are capitalised as part of the cost of the asset.. Other borrowing costs are recognised as financial expenses when incurred..

During the capitalisation period, the amount of interest (including amortisation of any discount or premium on borrowing) to be capitalised in each accounting period is determined as follows:

• Where funds are borrowed specifically for the acquisition and construction of a qualifying asset, the amount of interest to be capitalised is the interest expense calculated using effective interest rates during the period less any interest income earned from depositing the borrowed funds or any investment income on the temporary investment of those funds before being used on the asset..
• To the extent that the Group borrows funds generally and uses them for the acquisition and construction of a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to the weighted average of the excess amounts of cumulative expenditure on the asset over the above amounts of specific borrowings.. The capitalisation rate is the weighted average of the interest rates applicable to the general-purpose borrowings..

The effective interest rate is determined as the rate that exactly discounts estimated future cash flow through the expected life of the borrowing or, when appropriate, a shorter period to the initially recognised amount of the borrowings..

During the capitalisation period, exchange differences related to the principal and interest on a specific - purpose borrowing denominated in foreign currency are capitalised as part of the cost of the qualifying asset.. The exchange differences related to the principal and interest on foreign currency borrowings other than a specific - purpose borrowing are recognised as a financial expense when incurred..

The capitalisation period is the period from the date of commencement of capitalisation of borrowing costs to the date of cessation of capitalisation, excluding any period over which capitalisation is suspended.. Capitalisation of borrowing costs commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities of acquisition and construction that are necessary to prepare the asset for its intended use are in progress, and ceases when the assets become ready for their intended use.. Capitalisation of borrowing costs is suspended when the acquisition and construction activities are interrupted abnormally for a period of more than three months..

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X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   14. Intangible assets

Intangible assets are stated in the balance sheet at cost less accumulated amortisation (where the estimated useful life is finite) and impairment losses (see Note III..17).. For an intangible asset with finite useful life, its cost less estimated residual value and accumulated impairment losses is amortised using the straight-line method over its estimated useful life..

The respective amortisation periods for intangible assets are as follows:
	Amortisation
Item	period (years)
Concession rights	23-30 years
Software	10 years
Land use rights	50 years

An intangible asset is regarded as having an indefinite useful life and is not amortised when there is no foreseeable limit to the period over which the asset is expected to generate economic benefits for the Group.. The Group reassesses the useful lives of intangible assets with indefinite useful lives in each accounting period.. If there is evidence indicating that the useful life of that intangible asset is finite, the Group estimates its useful life and accounts for it in accordance with the same policy as intangible assets with finite useful lives described above..

(1) Concession rights

The Group has entered into concession agreements with different local governments in China ("the Grantor") in respect of its waste-to-energy ("WTE") projects on a Build-Operate-Transfer ("BOT") basis.. Under the service concession arrangements, the Group builds WTE plants (construction period) and operates these WTE plants (operation period) for a concession period of 23 to 30 years.. Upon the expiry of the concession period, the Group would transfer these WTE plants to respective Grantor without consideration or there is not any significant residual interest in the infrastructure.. The terms of the service concession arrangements allow the Group to earn waste treatment fees and electricity tariffs for the processing of waste and generation of electricity during the operation period..

The Group has entered into service concession arrangements with local governments in China ("the grantor") in respect of its hazardous waste treatment project on a Build-Operate-Own ("BOO") basis.. Under the service concession arrangements, the Group builds and operates the hazardous waste treatment plant and the terms of the service concession arrangements allow the Group to earn waste treatment fees for the processing of waste..

The Group recognises construction costs as financial assets to the extent that it has an unconditional contractual right to receive specified or determinable amount of cash or another financial asset from the grantor, or to receive the shortfall, if any, between the amount received from grantor and the specified or determinable amount, and accounts for the financial asset in accordance with the Accounting Standards for Business Enterprises No.. 22 - Recognition and Measurement of Financial Instruments (see Note III..9).. The Group recognises construction costs as intangible assets (WTE project operating rights) to the extent that it has a right to receive unspecified or indeterminable amount of fees from the users of service within a certain operating period after the completion of the relevant infrastructure where such right does not constitute an unconditional right to receive cash..

92	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   14. Intangible assets (Continued)

(2) Research and development expenditure

Expenditure on an internal research and development projects is classified into expenditure incurred during the research phase and expenditure incurred during the development phase..

Expenditure during the research phase is expensed when incurred. . Expenditure during the development phase is capitalised if development costs can be measured reliably, the product or process is technically and commercially feasible, and the Group intends to and has sufficient resources to complete the development.. Capitalised development costs are stated in the balance sheet at cost less impairment losses.. Other development expenditure is recognised as an expense in the period in which it is incurred..

15. Goodwill

The initial cost of goodwill represents the excess of cost of acquisition over the acquirer's interest in the fair value of the identifiable net assets of the acquiree under a business combination not involving entities under common control..

Goodwill is not amortised and is stated in the balance sheet at cost less accumulated impairment losses (see Note III..17).. On disposal of an asset group or a set of asset groups, any attributable goodwill is written off and included in the calculation of the profit or loss on disposal..

16. Long-term deferred expenses

Long-term deferred expenses are amortised using a straight-line method within the benefit period.. The respective amortisation periods for such expenses are as follows:

	Amortisation
Item	period (years)
Renovation costs for office under operating lease and others	3-5 years

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X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   17. Impairment of assets other than inventories and financial assets

The carrying amount of the following assets are reviewed at each balance sheet date based on internal and external sources of information to determine whether there is any indication of impairment:

• fixed assets
• intangible assets
• long-termequity investments
• goodwill
• long-termdeferred expenses
• right-of-useassets, etc..

If any indication exists, the recoverable amount of the asset is estimated.. In addition, the Group estimates the recoverable amounts of intangible assets not ready for use at least annually at each year-end, irrespective of whether there is any indication of impairment.. The Group estimates the recoverable amounts of goodwill at each year-end.. Goodwill is allocated to each asset group or set of asset groups, which is expected to benefit from the synergies of the combination for the purpose of impairment testing..

The recoverable amount of an asset (or asset group, set of asset groups) is the higher of its fair value (see Note III..18) less costs to sell and its present value of expected future cash flows..

An asset group is composed of assets directly related to cash-generation and is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or asset groups..

The present value of expected future cash flows of an asset is determined by discounting the future cash flows, estimated to be derived from continuing use of the asset and from its ultimate disposal, to their present value using an appropriate pre-tax discount rate..

An impairment loss is recognised in profit or loss when the recoverable amount of an asset is less than its carrying amount.. A provision for impairment of the asset is recognised accordingly.. Impairment losses related to an asset group or a set of asset groups, are allocated first to reduce the carrying amount of any goodwill allocated to the asset group or set of asset groups, and then to reduce the carrying amount of the other assets in the asset group or set of asset groups on a pro rata basis.. However, such allocation would not reduce the carrying amount of an asset below the highest of its fair value less costs to sell (if measurable), its present value of expected future cash flows (if determinable) and zero..

Once an impairment loss is recognised, it is not reversed in a subsequent period..

94	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   18. Fair value measurement

Unless otherwise specified, the Group measures fair value as follows:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date..

When measuring fair value, the Group takes into account the characteristics of the particular asset or liability (including the condition and location of the asset and restrictions, if any, on the sale or use of the asset) that market participants would consider when pricing the asset or liability at the measurement date, and uses valuation techniques that are appropriate in the circumstances and for which sufficient data and other information are available to measure fair value.. Valuation techniques mainly include the market approach, the income approach and the cost approach..

19. Revenue

Revenue is the gross inflow of economic benefits arising in the course of the Group's ordinary activities when the inflows result in increase in shareholders' equity, other than increase relating to contributions from shareholders..

Revenue is recognised when the Group satisfies the performance obligation in the contract by transferring the control over relevant goods or services to the customers..

Where a contract has two or more performance obligations, the Group determines the stand-alone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocates the transaction price in proportion to those stand-alone selling prices.. The Group recognises as revenue the amount of the transaction price that is allocated to each performance obligation..

The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.. The Group recognises the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved.. The consideration which the Group expects to refund to the customer is recognised as refund liabilities and excluded from transaction price.. Where the contract contains a significant financing component, the Group recognises the transaction price at an amount that reflects the price that a customer would have paid for the promised goods or services if the customer had paid cash for those goods or services when (or as) they transfer to the customer.. The difference between the amount of promised consideration and the cash selling price is amortised using an effective interest method over the contract term.. The Group does not adjust the consideration for any effects of a significant financing component if it expects, at contract inception, that the period between when the Group transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less..

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X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   19. Revenue (Continued)

The Group satisfies a performance obligation over time if one of the following criteria is met; or otherwise, a performance obligation is satisfied at a point in time:

• the customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs;
• the customer can control the asset created or enhanced during the Group's performance; or
• the Group's performance does not create an asset with an alternative use to it and the Group has an enforceable right to payment for performance completed to date..

For performance obligation satisfied over time, the Group recognises revenue over time by measuring the progress towards complete satisfaction of that performance obligation.. When the outcome of that performance obligation cannot be measured reasonably, but the Group expects to recover the costs incurred in satisfying the performance obligation, the Group recognises revenue only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation..

For performance obligation satisfied at a point in time, the Group recognises revenue at the point in time at which the customer obtains control of relevant goods or services.. To determine whether a customer has obtained control of goods or services, the Group considers the following indicators:

• the Group has a present right to payment for the goods or services;
• the Group has transferred physical possession of the goods to the customer;
• the Group has transferred the legal title of the goods or the significant risks and rewards of ownership of the goods to the customer; and
• the customer has accepted the goods or services..

A contract asset is the Group's right to consideration in exchange for goods or services that it has transferred to a customer when that right is conditional on factors other than the passage of time.. The Group recognises loss allowances for expected credit loss on contract assets.. Accounts receivable is the Group's right to consideration that is unconditional (only the passage of time is required).. A contract liability is the Group's obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer..

The following is the description of accounting policies regarding revenue from the Group's principal activities:

96	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   19. Revenue (Continued)

Revenue from BOT and Build-Transfer ("BT") projects

With respect to the public infrastructure construction business participated in on a BOT and BT basis, the Group, instead of recognising the revenue for those infrastructure construction being subcontracted to the third parties other than providing actual construction service, recognises financial assets and intangible assets based on the construction costs incurred and contract arrangement of each project in accordance with the Interpretation No.. 2 on Accounting Standards for Business Enterprises..

During the operating period, the Group recognises the electricity tariff and waste treatment fees according to the following principles respectively..

(a) Electricity tariff

Revenue is recognised by the Group when the electricity is supplied to and controlled by the local grid company.. The Group recognises the electricity tariff according to the actual volume of electricity supplied and the unit price and on-grid electricity as agreed in the electricity purchase and sale contracts..

(b) Waste treatment fees

Revenue is recognised by the Group during the course of providing waste treatment services.. The Group recognises the waste treatment fees according to the actual volume of waste treated and the unit price as agreed in the agreements, deducting the portion recognised as financial assets..

20. Interest income

The Group recognises the relevant interest income at amortised cost using the effective interest method for the financial assets recognised in the course of BOT and BT construction..

Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020

97

X.  FINANCIAL REPORT (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (Continued)
   21. Contract costs

Contract costs are either the incremental costs of obtaining a contract with a customer or the costs to fulfil a contract with a customer..

Incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained e..g.. an incremental sales commission.. The Group recognises as an asset the incremental costs of obtaining a contract with a customer if it expects to recover those costs.. Other costs of obtaining a contract are expensed when incurred..

If the costs to fulfil a contract with a customer are not within the scope of inventories or other accounting standards, the Group recognises an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:

• the costs relate directly to an existing contract or to a specifically identifiable anticipated contract, including direct labour, direct materials, allocations of overheads (or similar costs), costs that are explicitly chargeable to the customer and other costs that are incurred only because the Group entered into the contract;
• the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future;
• the costs are expected to be recovered..

Assets recognised for the incremental costs of obtaining a contract and assets recognised for the costs to fulfil a contract (the "assets related to contract costs") are amortised on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the assets relate and recognised in profit or loss for the current period.. The Group recognises the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity otherwise would have recognised is one year or less..

The Group recognises an impairment loss in profit or loss to the extent that the carrying amount of an asset related to contract costs exceeds:

• remaining amount of consideration that the Group expects to receive in exchange for the goods or services to which the asset relates; less
• the costs that relate directly to providing those goods or services that have not yet been recognised as expenses..

98	Dynagreen Environmental Protection Group Co., Ltd.  Interim Report 2020