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On April 12, 2024, the State Council officially issued the "Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development in the Capital Market," aiming to drive capital markets to serve national strategies and promote high-quality economic development while continuing to enhance investor protection.

As a publicly listed company, operating with stability, continuous innovation, and performance optimization are essential for healthy development and protecting investors' interests. To this end, since the end of 2023, ZEHO ECO has held multiple meetings with the board of directors and senior management to thoroughly discuss and establish the 2024 operational tasks, proposing and emphasizing seven key initiatives to ensure stable operations and effectively respond to new market challenges. These initiatives not only reflect ZEHO ECO's deep insights into the market environment but also demonstrate the company's firm commitment to pursuing a path of high-quality development and its professional ability to effectively manage risks.

Optimize Organizational Structure and Define Key Responsibilities

In 2024, ZEHO ECO established clear key tasks and further optimized its organizational structure to achieve its strategic goals for the year. Through adjustments and strengthening of the core team, the company aims to ensure the smooth attainment of its annual budget targets.

In the current uncertain market environment, the company is focusing on key elements to maintain clarity and direction. For cash flow management, the completion and collection of project settlements has been elevated to a strategic level, with a first-tier organization for settlement and collection established. The chairman and two founding shareholders lead this effort, along with a team of dynamic young talent from the '85 generation, fully activating settlement processes for 28 projects, laying a solid foundation for subsequent cash flow. The company will also work on supplier settlements for projects to ensure the continued stable operation of the supply chain.

As the team responsible for the company's core business, the ecological environment sector further optimized its focus in 2024, with the vice chairman and president taking the lead. This sector is comprised of a highly efficient management team of nine members, assembled from experienced company vice presidents, and operates under the principle of "group army tactics." It maintains independent assessments and autonomous management to further stimulate team vitality and responsibility, while enhancing the overall competitiveness of the company's ecological environment business through coordination among the investment, design, technology, and construction teams.

As the pivotal team for the company's transformational growth, the digital technology sector will focus on smart water management. A new board member will be added in the first half of the year to lead the business, collaborating with the founding shareholders and technical leaders to form a core team with strong execution and innovation capabilities. This team will drive the integration of digital technology in the fields of water conservancy, ecology, and environmental protection, providing robust technical support for the development of new productive forces in the industry.

Focus on Core Markets to Ensure High-Quality Contract Wins

In 2023, the company actively adjusted its market layout, focusing on key cities like Beijing, Wuhan, Ningbo, and Shenzhen. It expanded its regional market through joint ventures with local state-owned enterprises and leading companies. In Beijing, the company actively participated in promoting the integration of water conservancy, ecology, environment, and landscaping in various districts, having signed a strategic cooperation agreement with the local state-owned Beijing Jinhe Water Group. In Wuhan, responding to the "Yangtze River Protection" strategy, the company took part in the rising small watershed management projects. The joint venture with Zhenghe Hengkuan is now integrating the strengths of both parties and is actively expanding river and lake business. Meanwhile, the company has reached strategic cooperation agreements with several state-owned enterprises such as CCCC Dredging, and cooperation with local governments in Ningbo and Shenzhen is progressing steadily.

In smart water management innovation, ZEHO ECO collaborates with leading technology companies like Zhipu AI, Infrawaves, and Infinigence to promote innovative applications of AI large models in urban-rural safety and eco-environmental fields. Using advanced technologies such as numerical tracing and hydrological and water quality monitoring, the company provides scientific decision-making support for urban and rural water safety and water environment management. This has allowed the company to establish a core competitive advantage in "Water Safety + Ecosystem Construction + Smart Technology," laying a solid foundation for achieving annual order targets.

Additionally, with a continued focus on market alignment and improved personnel structure, the company's management expenses and labor costs in 2024 are significantly reduced compared to the same period, further enhancing operational efficiency.

Enhance Comprehensive Detailed Budgeting and Deepen Integration of Business and Finance Management

In 2024, ZEHO ECO will prioritize comprehensive budget management as a core lever to improve company management, further emphasizing the integration of business and finance. Through accurate analysis of the three financial statements and their alignment with key performance indicators (KPIs), the company can monitor the operational status of each business segment in real time, enabling prompt problem detection and resolution to ensure the smooth realization of overall strategic goals.

After a thorough analysis of the annual budget, the company has clearly defined targets and tasks for the overall organization and each business segment. At the company level, considering the current market environment, competitive landscape, and its own resource capabilities, ZEHO ECO has set revenue growth, cost control, and profit targets that are stable yet challenging. At the business segment level, the company has crafted detailed market layouts, operational strategies, and cost control measures tailored to the unique characteristics and development needs of each segment, using report-based assessments to gain insights into business progress.

Enhance Internal Control Management and Strengthen Execution

In 2024, the company established an internal control management system that aligns with its operational development. On the process level, the company updated its internal control process framework based on its strategic objectives and organizational changes. It mapped out the key control activities and responsibility distribution across each process, creating a "process panorama map." The updated process map includes 23 primary processes, 112 secondary processes, and 322 key control activities, with critical decision-making processes embedded in the information system to ensure proper implementation.

On the policy level, the company integrated and upgraded existing policies, strengthening risk prevention and clarifying business principles, work standards, workflow steps, and corresponding control measures. In areas like market expansion and product innovation, the company maintained business flexibility while controlling major risks to better adapt to market changes.

On the execution level, to ensure the effectiveness of internal control implementation, the company developed an internal control rollout plan. It promotes implementation through communication and training, process supervision, and audits focused on internal control and critical issues, ensuring effective internal control execution.

Refine Evaluation Mechanisms and Foster Diverse Talent

In 2024, the company is focusing on human resources management, aiming to create a solid foundation for sustainable, stable, and efficient development through leadership team building, refining evaluation mechanisms, and establishing a talent development and training system.

When building the leadership team, the company emphasizes complementary advantages among diverse talents to achieve synergy. Regarding the evaluation mechanism, the company sets clear, comprehensive assessment standards and links the results to promotion, compensation, and other incentive mechanisms, stimulating employee enthusiasm and creating a positive work environment. For talent development, the company develops personalized development plans based on employees' career aspirations and provides diverse training and growth opportunities.

Strengthen Operations Management and Deepen Operations Analysis

In 2024, ZEHO ECO has comprehensively strengthened its operations management and placed special emphasis on the depth and breadth of operational analysis. Through detailed analysis and planning, the company aims to enhance operational efficiency and ensure the successful achievement of business objectives.

In terms of operations analysis, there is a focus at both the corporate level and within each business segment. Each business segment operates on a monthly cycle, closely monitoring the three financial statements. By comparing actual results against targets, they identify operational gaps and issues, making quick adjustments. This allows for early planning of business adjustments and budget achievement pathways for the next quarter. At the company level, the operational analysis occurs quarterly. In addition to an in-depth analysis of the financial statements for the company and each business segment, comprehensive evaluations are conducted on personnel structure and labor cost variations.

Enhance Shareholder Interaction and Safeguard Investor Rights

The company places great importance on protecting investor interests and strengthens communication with investors through multiple channels, allowing them to fully and promptly understand the company's development strategy, business model, and operational status. This fosters a better understanding and acceptance of the company among investors. Additionally, through real-time communication with investors, the company gains insight into their concerns, allowing it to self-examine and adjust operations accordingly.

ZEHO ECO, building on a foundation of stable operations, is actively addressing new market challenges. Through measures like reinforcing strategic planning and execution, market expansion, technological innovation, accounts receivable collection, technology empowerment, and talent management, the company continually enhances its core competitiveness to achieve high-quality growth.