Anhui Zhonghuan Environmental Protection Technology Co.Ltd(300692) : summary of 2021 Annual Report

Securities code: Anhui Zhonghuan Environmental Protection Technology Co.Ltd(300692) securities abbreviation: Anhui Zhonghuan Environmental Protection Technology Co.Ltd(300692) Announcement No.: 2022021 Anhui Zhonghuan Environmental Protection Technology Co.Ltd(300692)

Summary of annual report 2021

1、 Important note: the summary of this annual report comes from the full text of the annual report. In order to fully understand the company’s operating results, financial status and future development plan, investors should carefully read the full text of the annual report in the media designated by the CSRC. The board of directors and senior management personnel have raised no objection to the annual report of the company. The audit opinion of Rongcheng Certified Public Accountants (special general partnership) on the company’s financial report this year is: standard unqualified opinion. Changes of accounting firm during the reporting period: the accounting firm of the company has not changed this year, which is Rongcheng accounting firm (special general partnership). Tips on non-standard audit opinions □ applicable √ not applicable the company was not profitable at the time of listing and is not profitable at present □ applicable √ not applicable to the profit distribution plan of common stock or the plan of converting accumulation fund into share capital in the reporting period considered by the board of directors √ applicable □ not applicable

The profit distribution plan approved by the board of directors is: Based on 423750439, the company will distribute cash dividend of 0.50 yuan (tax included) to all shareholders for every 10 shares, bonus shares of 0 share (tax included), and capital reserve to all shareholders for every 10 shares.

Preferred stock profit distribution plan for the reporting period adopted by the board of directors □ applicable √ not applicable II. Basic information of the company 1. Company profile

Stock abbreviation Anhui Zhonghuan Environmental Protection Technology Co.Ltd(300692) stock code Anhui Zhonghuan Environmental Protection Technology Co.Ltd(300692)

Shenzhen Stock Exchange

Contact person and contact information secretary of the board of directors securities affairs representative

Name: Jiang Qiong Hou qiongling

Office address: 22 / F, block B1, Zhongchen future port, No. 1120, Dalian Road, Baohe District, Hefei City, Anhui Province

Fax: 055163868248

Tel: 055163868248

E-mail [email protected]. [email protected].

2. Introduction to main business or products during the reporting period

(I) main business of the company

The company is a national high-tech enterprise integrating R & D, design, investment, construction, operation, manufacturing and consulting. It is specialized in municipal sewage, industrial wastewater treatment, black and smelly water body, wetland treatment and other water environment treatment, as well as waste incineration power generation, urban and rural waste recycling treatment, sludge recycling treatment, etc. it is committed to providing customers with stable, efficient The one-stop service and package solution of innovative technology have a number of invention patented technologies in many subdivided fields, such as industrial wastewater, township sewage treatment and sludge resource treatment. It is China’s leader in comprehensive solutions for environmental treatment.

During the reporting period, the company also actively arranged the photovoltaic business, combined with the site advantages and technical reserves of sewage treatment plants and domestic waste incineration power plants, laid distributed photovoltaic power generation systems in multiple plant areas, and actively implemented the double carbon action while saving operating costs and improving enterprise benefits.

During the reporting period, the company’s main businesses are as follows:

1. Water environment treatment business

(1) Municipal sewage and rural sewage treatment: provide the whole process services of design, investment, construction and operation of sewage treatment plant through BOT, TOT, PPP, dbo and other modes.

(2) Industrial wastewater treatment: provide customers with systematic solutions for all kinds of industrial wastewater such as textile printing and dyeing, mining, battery, medical treatment and high concentration organic wastewater.

(3) Comprehensive treatment of environmental problems in the Industrial Park: for the wastewater in the industrial park, optimize the management of the whole life cycle from the source, process and terminal treatment to help customers achieve emission reduction, energy conservation, resource recovery and system safety.

(4) Construction and operation and maintenance of sewage pipe network: provide customers with pipe network design and construction services under centralized and decentralized drainage system, and provide customers with various services such as operation management, inspection and maintenance of sewage pipe network and sewage pump station by means of informatization, so as to open up key nodes, so that the built sewage pipeline can operate in network and fully provide the efficiency of sewage collection and transmission.

(5) Comprehensive treatment of water environment: provide specialized ecological restoration and long-term operation solutions such as comprehensive treatment of river basins, restoration of urban black and smelly water bodies, treatment of internal pollution of sediment, urban parks, wetlands and landscape treatment.

2. Waste incineration power generation and solid waste resource treatment business

(1) Waste incineration power generation: provide whole process services such as investment, construction and operation of waste incineration power plant.

(2) Sludge treatment: the reduction, harmlessness and recycling of sludge are realized by two technical routes: ultra-high temperature aerobic fermentation and drying incineration.

(3) Food waste treatment: according to the characteristics of Chinese food waste, independent research and development is carried out on the basis of learning from foreign advanced technology. Automatic separation, hydrolysis and slag removal technology, multi-stage solid-liquid separation technology and high-efficiency anaerobic fermentation technology are adopted, and the advantages of waste incineration and power generation are combined to realize the efficient treatment of food waste.

(4) Landfill leachate treatment: the process flow of “pretreatment + Anaerobic + MBR + NF + ro” is adopted, and the intermediate and final produced water is used in all links of waste incineration power generation to achieve zero discharge.

(II) business model

1. Investment and operation services: the company conducts business in BOT, TOT, PPP and other modes to provide customers with investment, construction, operation and other services. Obtain income through the operation during the franchise period, recover the investment and obtain the investment income.

2. Project contracting services: the company carries out the design, construction, equipment integration, general contracting and other businesses of urban and rural sewage treatment, municipal pipe network, garden, ecological treatment, wetland, black and smelly water, industrial wastewater, solid waste, garbage treatment and other projects in the mode of EPC, dbo, project general contracting or equipment general contracting. The company has obtained a number of qualifications, including class I qualification for professional contracting of environmental protection projects, class I qualification for general contracting of electromechanical engineering construction, class I qualification for general contracting of municipal public engineering construction, and class a qualification for special environmental engineering (water pollution prevention and Control Engineering).

3. Professional technical services: the company provides all kinds of consulting, planning, design, entrusted operation and other third-party services related to environmental protection, including environmental monitoring. (III) main performance drivers

1. National policy support and market driven

Since 2021, the state has continued to introduce relevant policies around industry development and environmental protection, focusing on ecological civilization construction and environmental governance. The proposal of the “double carbon target”, the development plan for urban sewage treatment and resource utilization in the 14th five year plan, the development plan for urban domestic waste classification and treatment facilities in the 14th five year plan, and the guiding opinions on accelerating the construction of urban environmental infrastructure have put forward the direction and development objectives of China’s environmental governance in the future from different angles, At the same time, it is proposed to support qualified urban environmental infrastructure projects through investment and other channels within the central budget, and bring qualified projects into the scope of special bond support of local governments. Thanks to the joint influence of continuous policy promotion and financial support, in the process of accelerating urban environmental infrastructure construction, the infrastructure of sewage treatment and domestic waste incineration treatment has been continuously improved, the national sewage treatment capacity and waste treatment capacity have been continuously increased, and the market space of the company has been gradually widened due to the in-depth development of relevant industries, The company’s operating performance grew steadily.

2. Whole industry chain service capability

The company’s business scope covers municipal sewage treatment, industrial wastewater treatment, black and smelly water body, wetland treatment and other water environment treatment, as well as waste incineration power generation, urban and rural waste recycling treatment, sludge recycling treatment, etc. it has systematic scheme design and implementation ability, and can meet the needs of cross domain business packaging and integration of customers such as government, industrial enterprises and industrial parks, Provide systematic solutions. Moreover, the company will gradually build and improve its service capacity in the fields of environmental consulting services, comprehensive environmental governance, environmental protection technology products and environmental engineering supporting facilities through endogenous and epitaxial growth, improve the company’s business sector and industrial chain, and comprehensively improve the company’s comprehensive environmental protection service capacity. (IV) basic information of the industry

1. Water environment treatment industry

The water environment treatment industry includes many business segments, such as urban sewage treatment, rural sewage treatment, river and lake ecological restoration and watershed treatment, black and smelly water treatment, and each field has good market prospects in the future.

In the field of urban sewage treatment, under the background that the urban sewage treatment rate has reached 97.53% and the demand for new sewage treatment facilities is slowing down, the upgrading and reconstruction of sewage treatment plants and the new construction of sewage treatment facilities in built towns will become new growth points. For the upgrading and reconstruction, at present, a considerable number of sewage treatment plants have not reached the national level a discharge standard. With the continuous improvement of sewage discharge standards in the future and the introduction of more stringent local standards, the demand for upgrading and reconstruction will continue to grow; During the 13th Five Year Plan period, the planned new investment in the upgrading and reconstruction of urban sewage treatment facilities in China was 43.189 billion yuan, an increase of 215.25% compared with the 12th Five Year Plan period. It is expected that the substantial growth trend will continue in the 14th Five Year Plan period. For the construction of sewage treatment facilities in established towns, by 2020, the average number of sewage treatment plants owned by each established town implementing domestic sewage treatment in China is still less than 1; In addition, the sewage treatment rate of built-up towns grew slowly, only 60.98% by 2020, which failed to meet the target of 70% in the 13th five year plan. During the 14th Five Year Plan period, the investment in sewage treatment of built-up towns in China is expected to continue to increase.

In the field of rural sewage treatment, although the scale of investment in rural sewage treatment in China has maintained rapid growth, on the whole, the promotion of rural water environment treatment still lags behind that of cities and towns, and the construction intensity of sewage treatment facilities and sewage treatment capacity need to be improved. For townships, in 2020, 3095 townships in China implemented domestic sewage treatment, accounting for only 34.87% of the total; In addition, in 2020, among the Townships Taking treatment measures for domestic sewage, the number of sewage treatment plants totaled 2170, that is, each township had only 0.70 on average. For villages, there are 492995 administrative villages in China by 2020. During the 13th Five Year Plan period, a total of 150000 organic villages have been renovated. In addition, considering that the penetration rate of village sewage treatment facilities and sewage treatment capacity are still lower than those of townships, the market gap is more obvious. In the future, rural sewage treatment will become an important focus for the promotion of water environment treatment, and the construction of relevant infrastructure will be continuously strengthened.

In the field of river lake ecological restoration and watershed management, in terms of watershed management, the water quality of Haihe River Basin and Liaohe River Basin in China is still at the level of “light pollution”. In the future, watershed management will focus on the above areas, and strive to maintain the water quality of other watersheds at an excellent level; In terms of lake management, in recent years, China has continued to increase investment in Lake Ecological Management in response to problems such as water eutrophication and cyanobacteria outbreak. During the 13th Five Year Plan period, the total planned investment in the management of the “Three Great Lakes” of Dianchi Lake, Taihu Lake and Chaohu Lake amounted to 117687 billion yuan, In the future, the governance of the “Three Great Lakes” and other large, medium and small lakes will continue to be implemented and deepened. In addition, the continuous promotion of river and lake ecological restoration and Watershed Governance, as well as the tightening of environmental protection requirements, will put forward higher requirements for the tail water discharge standard of sewage treatment plant.

In the field of black and odorous water treatment, China’s urban black and odorous water treatment has achieved remarkable results, but some cities only take “water quality is not black and odorous” as the treatment goal, and some river sections still have the phenomenon of returning black and odorous. During the “14th five year plan” period, urban black and odorous water treatment still has the market demand to consolidate and improve the treatment results. At present, the overall work of rural black and odorous water treatment is still in the stage of investigation and statistics. With the introduction of guiding policy documents such as the five-year action plan for the improvement of rural residential environment (20212025), rural areas will become one of the key areas of black and odorous water treatment in the future.

2. Domestic waste incineration power generation industry

With the continuous advancement of urbanization, the number and scale of cities in China have been expanding, and the absolute number and relative proportion of urban population have increased significantly. By 2021, China’s urban population has increased from 456 million in 2000 to 914 million, and the population urbanization rate has increased from 36.09% in 2000 to 64.72%.

In order to further implement the people-centered new urbanization strategy and accelerate the integrated development of urban and rural areas, the national development and Reform Commission issued the key tasks of new urbanization and integrated development of urban and rural areas in 2021 in April 2021, proposing six key tasks of new urbanization and integrated development of urban and rural areas in 2021, so as to promote the orderly and effective integration of agricultural transferred population into cities We will improve the carrying capacity of urban agglomerations and metropolitan areas, promote the coordinated development of large, medium and small cities and small towns, accelerate the construction of modern cities, improve the level of urban governance and accelerate the integrated development of urban and rural areas, and make it clear that we will continue to accelerate the process of urbanization in the future.

In order to match the rapid economic development and meet the increasing treatment demand of domestic waste year by year, China continues to explore the characteristics of domestic waste in line with China

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