香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈之內容概不負責， 對其準確性或完整性亦不發表任何聲明，並明確表示概不就因本公佈全部或任何 部分內容而產生或因倚賴該等內容而引致之任何損失承擔任何責任。 （於開曼群島註冊成立並遷冊往百慕達之有限公司） （股份代號：855） 截至二零二三年三月三十一日止年度之業績公佈 | --- | --- | --- | --- | --- | --- | |----------------|-------|--------------------------------------------------------------|---------------------------|---------------------------|---------------------| | | | 截至三月三十一日止年度之財務摘要 | 二零二三年 \n港幣百萬元 | 二零二二年 \n港幣百萬元 | 變動 \n% \n附註 (1) | | 收益 | | 總計 | 14,195.0 | 12,949.8 | 9.6 | | | | 管道直飲水供應經營及管道直飲水供應 | | ...

Financial Performance - Total revenue for the six months ended September 30, 2022, was HKD 6,785.2 million, representing a 4.8% increase from HKD 6,472.8 million in the same period last year[13]. - Gross profit decreased slightly to HKD 2,508.3 million, down 0.7% from HKD 2,525.3 million year-on-year[13]. - Profit attributable to owners of the company was HKD 970.4 million, a decrease of 4.8% compared to HKD 1,019.7 million in the previous year[13]. - Basic earnings per share were HKD 0.5945, down 6.5% from HKD 0.6361 in the prior period[13]. - Net profit for the period was HKD 1,510,416, a decrease of 4.3% from HKD 1,578,777 in the previous year[28]. - The group reported a net profit of HKD 1,510,416 for the period, compared to HKD 1,578,777 in the same period last year, indicating a decrease of about 4.32%[47]. - Total income tax expense for the six months ended September 30, 2022, was HKD 496,122,000, down 3.2% from HKD 512,588,000 in 2021[53]. Assets and Liabilities - Total assets increased to HKD 57,256.6 million, a 0.3% rise from HKD 57,064.4 million year-on-year[13]. - Total liabilities rose to HKD 37,379.9 million, reflecting a 2.2% increase from HKD 36,581.7 million[13]. - Net asset value decreased to HKD 19,876.8 million, down 3.0% from HKD 20,482.7 million[13]. - Total assets as of September 30, 2022, were HKD 40,062,673, a decrease from HKD 40,565,527 as of March 31, 2022[29]. - The total liabilities as of September 30, 2022, amounted to HKD 20,981,517, compared to HKD 19,248,385 as of March 31, 2022, reflecting an increase of approximately 9.0%[30]. - The total liabilities as of September 30, 2022, were HKD 4,980,486,000, compared to HKD 4,673,899,000 at the end of March 2022, indicating a rise of 6.5%[63]. Cash Flow and Liquidity - Cash and cash equivalents increased to HKD 6,302,752 from HKD 6,022,821, indicating improved liquidity[29]. - The net cash inflow from operating activities for the six months ended September 30, 2022, was HKD 1,292,878, a decrease from HKD 1,683,923 in the previous year, representing a decline of approximately 23.2%[32]. - The cash and cash equivalents at the end of the period were HKD 6,302,752, an increase from HKD 4,672,012 in the previous year, representing a growth of about 34.8%[32]. - The group maintained a strong liquidity position with cash and cash equivalents totaling approximately HKD 6,880,600,000 as of September 30, 2022, up from HKD 6,529,200,000 on March 31, 2022[84]. Dividends - The interim dividend remained stable at HKD 0.16 per share, consistent with the previous year[13]. - The interim dividend declared was HKD 0.16 per share, unchanged from the previous year, totaling HKD 261,172,000[55]. Segment Performance - The segment profit for the urban water supply and construction division was HKD 1,913,546, while the environmental segment reported a profit of HKD 251,229, and the property development and investment segment showed a profit of HKD 56,212, contributing to a total segment profit of HKD 2,205,328[47]. - The revenue from the urban water supply and construction segment was HKD 5,152,800,000, a slight increase of 0.1% compared to HKD 5,145,700,000 in the previous year[80]. - The environmental protection segment's revenue rose significantly by 22.3% to HKD 729,000,000 from HKD 596,100,000 in the previous year[81]. - The property segment recorded a revenue of HKD 373,400,000, a decrease of 38.3% from HKD 386,500,000 in the previous year[82]. Financial Risks and Management - The group has various financial risks including market risk, credit risk, and liquidity risk[38]. - The company maintains strict control over receivables to minimize credit risk, with overdue balances regularly reviewed by senior management[62]. - The group has not utilized derivative financial instruments to hedge foreign currency risks and closely monitors its non-Renminbi borrowings[87]. Shareholder Information - As of September 30, 2022, the largest shareholder, Asset Full Resources Limited, holds 471,036,301 shares, representing approximately 28.86% of the company's issued share capital[93]. - ORIX Corporation is another significant shareholder, holding 291,170,277 shares, which accounts for approximately 17.84% of the company's issued share capital[93]. Corporate Governance - The group has complied with all applicable provisions of the Corporate Governance Code, except for deviations regarding the roles of the chairman and CEO, and the rotation of directors[95]. - The board believes that the current structure of leadership does not impair the balance of power between the board and management, supporting effective decision-making[95].

Financial Performance - Total revenue for the year reached HKD 12,949.8 million, an increase of 25.2% compared to HKD 10,345.5 million in the previous year[6]. - Net profit attributable to shareholders was HKD 2,977.1 million, reflecting an 11.8% increase from HKD 2,662.1 million in the prior year[6]. - Basic earnings per share rose to HKD 1.17, up 11.9% from HKD 1.06 in the previous year[6]. - The group's total revenue increased significantly by 25.2% to HKD 12,949,800,000 for the year ended March 31, 2022, compared to HKD 10,345,500,000 in the previous year[20]. - The core business segments, "Urban Water Supply Operations and Construction" and "Environmental Protection," achieved a combined revenue of HKD 11,597,900,000, reflecting a stable growth of 19.0% from HKD 9,749,200,000[20]. - The urban water supply segment generated revenue of HKD 10,347,100,000, marking a growth of 21.1% from HKD 8,544,000,000[21]. - The environmental business segment reported a revenue of HKD 1,250.8 million, showing a growth of 10.4% from HKD 1,125.0 million[12]. Assets and Liabilities - The total asset value increased to HKD 57,064.4 million, a growth of 21.3% from HKD 47,038.0 million[6]. - The total liabilities amounted to HKD 36,581.7 million, representing a 21.6% increase from HKD 30,088.0 million[6]. - The group has an outstanding loan amount of HKD 21,863,500,000 as of March 31, 2022, an increase from HKD 18,428,900,000 the previous year, primarily due to capital expenditures and debt repayment[28]. - The capital debt ratio stands at 64.1% as of March 31, 2022, slightly up from 64.0% in the previous year[28]. Dividends - The company declared a total dividend of HKD 0.34 per share, an increase of 9.7% from HKD 0.31 in the previous year[6]. - The board proposed a final dividend of HKD 0.18 per share, bringing the total dividend for the year to HKD 0.34 per share, compared to HKD 0.31 in the previous year[17]. Growth and Market Strategy - The group aims to become the leading integrated operator in water supply and environmental services in China, targeting a potential service population of over 30 million across approximately 70 counties and cities[18]. - The group anticipates significant growth potential in the water services sector due to ongoing urbanization and economic growth, with expectations for substantial increases in water fees and consumption[18]. - The group plans to upgrade its pipeline drinking water service as one of its dual core businesses, aiming to enhance service quality and meet the public's demand for improved living standards[25]. - The group aims to leverage policy benefits and market opportunities to achieve sustainable and high-quality development while enhancing revenue and profitability[25]. Corporate Governance - The company reported a commitment to maintaining high standards of corporate governance to enhance shareholder value[41]. - The board of directors has reviewed its governance practices to meet increasing regulatory requirements and shareholder expectations[41]. - The company has established a corporate governance policy to guide the effective application of governance principles[41]. - The board believes that the continuity of leadership is crucial for the successful implementation of long-term business plans[41]. - The company has a policy that one-third of directors must retire at each annual general meeting, although the chairman is exempt from this rule[41]. Risk Management - The risk management and internal control systems are designed to manage risks rather than eliminate them, providing reasonable assurance against material misstatements[56]. - The board has established a framework for risk management, determining the nature and extent of risks acceptable to achieve strategic objectives[57]. - The company identifies operational and liquidity risks as significant factors that could impact financial performance and business outlook[69]. Environmental and Social Responsibility - The company has implemented energy-saving measures, including upgrading older water plants and introducing new technologies to reduce energy consumption[75]. - The company prioritizes the use of clean energy, installing solar power systems to reduce energy consumption on site[75]. - The company has a robust waste management system in place, ensuring compliance with environmental standards for waste disposal[75]. Financial Reporting and Compliance - The independent auditor confirmed that the financial statements reflect the group's financial position as of March 31, 2022, and its performance for the year ended on that date[109]. - The audit report confirmed that there were no significant misstatements in the financial statements, ensuring the reliability of the reported figures[123]. - The company has maintained compliance with relevant laws and regulations, ensuring no significant violations reported during the year[76]. Employee and Management - The group employs approximately 11,000 staff members, with compensation based on various factors including experience and performance[29]. - The company has a strong management team with extensive experience in finance and corporate governance[40]. - The employee compensation policy is based on performance, qualifications, and market data, ensuring alignment with the company's operational performance[96].

[Corporate Information](index=3&type=section&id=Corporate%20Information) This section provides core corporate details including registration information, board members, committee members, principal office addresses, legal advisors, auditors, and principal bankers - This section provides core corporate details including registration information, board members (executive, non-executive, and independent non-executive directors), committee members, principal office addresses, legal advisors, auditors, and principal bankers[4](index=4&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) [Overall Performance](index=5&type=section&id=Overall%20Performance) For the six months ended September 30, 2021, the Group's total revenue increased by 26.1% to approximately **HKD 6.47 billion**, gross profit grew by 19.7% to **HKD 2.53 billion**, and profit attributable to owners of the company rose by 23.4% to **HKD 1.02 billion**, with total assets increasing by 11.2% Performance Summary (For the Six Months Ended September 30) | Indicator | 2021 (Unaudited) | 2020 (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Revenue (Thousand HKD) | 6,472,791 | 5,131,231 | +26.1% | | Gross Profit (Thousand HKD) | 2,525,327 | 2,110,482 | +19.7% | | Profit for the Period (Thousand HKD) | 1,578,777 | 1,267,490 | +24.6% | | Profit Attributable to Owners of the Company (Thousand HKD) | 1,019,696 | 826,479 | +23.4% | | Basic Earnings Per Share (HK cents) | 63.61 | 51.68 | +23.1% | | Interim Dividend (HK cents) | 16 | 15 | +6.7% | Balance Sheet Summary and Ratios | Indicator | September 30, 2021 (Unaudited) | March 31, 2021 (Audited) | Change | | :--- | :--- | :--- | :--- | | Total Assets (Thousand HKD) | 52,323,847 | 47,038,047 | +11.2% | | Total Liabilities (Thousand HKD) | 33,535,061 | 30,088,019 | +11.5% | | Net Assets (Thousand HKD) | 18,788,786 | 16,950,028 | +10.8% | | Gearing Ratio | 64.1% | 64.0% | - | [Segment Analysis](index=7&type=section&id=Segment%20Analysis) During the reporting period, both water supply and environmental protection segments achieved robust growth, with water supply revenue increasing by 21.4% and profit by 18.5%, while environmental protection revenue grew by 19.2% and profit significantly by 42.0% Water Supply Segment Analysis (For the Six Months Ended September 30) | Indicator | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Revenue (Million HKD) | 5,145.7 | 4,240.2 | +21.4% | | Profit (Million HKD) | 1,927.4 | 1,626.4 | +18.5% | - Water supply revenue primarily comprises **water supply construction services (44.6%)**, **water supply operation services (32.7%)**, and **water supply connection income (20.9%)**[16](index=16&type=chunk) Environmental Protection Segment Analysis (For the Six Months Ended September 30) | Indicator | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Revenue (Million HKD) | 596.1 | 500.2 | +19.2% | | Profit (Million HKD) | 188.6 | 132.8 | +42.0% | - Environmental protection revenue mainly derives from **wastewater treatment and water environment management construction services (62.6%)** and **wastewater treatment operation services (29.5%)**[19](index=19&type=chunk) [Interim Financial Information](index=9&type=section&id=Interim%20Financial%20Information) [Condensed Consolidated Statement of Profit or Loss](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended September 30, 2021, the company's revenue was **HKD 6.47 billion**, a 26.1% year-on-year increase, with gross profit at **HKD 2.53 billion**, up 19.7%, and profit attributable to owners of the company at **HKD 1.02 billion**, up 23.4% Key Items from Statement of Profit or Loss (For the Six Months Ended September 30) | Item | 2021 (Thousand HKD) | 2020 (Thousand HKD) | Y-o-Y Growth | | :--- | :--- | :--- | :--- | | Revenue | 6,472,791 | 5,131,231 | 26.1% | | Gross Profit | 2,525,327 | 2,110,482 | 19.7% | | Profit from Operations | 2,169,782 | 1,834,602 | 18.3% | | Profit Before Income Tax | 2,091,365 | 1,714,050 | 22.0% | | Profit for the Period | 1,578,777 | 1,267,490 | 24.6% | | Profit Attributable to Owners of the Company | 1,019,696 | 826,479 | 23.4% | [Condensed Consolidated Statement of Comprehensive Income](index=11&type=section&id=Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) During the reporting period, total comprehensive income for the period significantly increased to **HKD 2.22 billion** from **HKD 1.45 billion** in the prior year, primarily driven by profit for the period and **HKD 610 million** from currency translation - Other comprehensive income for the period was **HKD 644 million**, primarily contributed by **HKD 606 million** from exchange differences on translation[23](index=23&type=chunk) - Total comprehensive income attributable to owners of the company was **HKD 1.52 billion**, an approximate **60% increase** from **HKD 950 million** in the prior year[23](index=23&type=chunk) [Condensed Consolidated Statement of Financial Position](index=12&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of September 30, 2021, the Group's total assets were **HKD 52.32 billion**, an 11.2% increase from March 31, 2021, with total liabilities at **HKD 33.54 billion** and net assets at **HKD 18.79 billion**, while net current liabilities narrowed from **HKD 1.67 billion** to **HKD 840 million** Key Items from Statement of Financial Position | Item | September 30, 2021 (Thousand HKD) | March 31, 2021 (Thousand HKD) | | :--- | :--- | :--- | | Non-current Assets | 37,397,399 | 34,161,262 | | Current Assets | 14,926,448 | 12,876,785 | | **Total Assets** | **52,323,847** | **47,038,047** | | Current Liabilities | 15,770,495 | 14,547,158 | | Non-current Liabilities | 17,764,566 | 15,540,861 | | **Total Liabilities** | **33,535,061** | **30,088,019** | | **Net Assets** | **18,788,786** | **16,950,028** | | **Total Equity** | **18,788,786** | **16,950,028** | [Condensed Consolidated Statement of Cash Flows](index=15&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) During the reporting period, net cash inflow from operating activities was **HKD 1.68 billion**, a 45.5% year-on-year increase, with net cash outflow from investing activities at **HKD 2.06 billion**, net cash inflow from financing activities at **HKD 1.13 billion**, and cash and cash equivalents at period-end at **HKD 4.67 billion** Cash Flow Statement Summary (For the Six Months Ended September 30) | Item | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Net Cash Inflow from Operating Activities | 1,683,923 | 1,157,337 | | Net Cash Outflow from Investing Activities | (2,062,490) | (2,475,058) | | Net Cash Inflow from Financing Activities | 1,131,082 | 672,617 | | Increase/(Decrease) in Cash and Cash Equivalents | 752,515 | (645,104) | | Cash and Cash Equivalents at End of Period | 4,672,012 | 5,018,130 | [Notes to the Condensed Consolidated Financial Information](index=18&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Information) The financial statements are prepared under HKAS 34 on a going concern basis, with notes detailing revenue composition by segment, significant acquisitions, dividend policy, and related party transactions [Note 5: Revenue and Other Income](index=22&type=section&id=Note%205:%20Revenue%20and%20Other%20Income) Total revenue for the period was **HKD 6.47 billion**, primarily from **water supply construction services (HKD 2.12 billion)**, **water supply operation services (HKD 1.64 billion)**, and **water supply connection income (HKD 1.05 billion)** Revenue Composition (For the Six Months Ended September 30) | Revenue Source | 2021 (Thousand HKD) | 2020 (Thousand HKD) | | :--- | :--- | :--- | | Water Supply Construction Services | 2,120,025 | 1,891,837 | | Water Supply Operation Services | 1,642,254 | 1,342,587 | | Water Supply Connection Income | 1,052,154 | 905,698 | | Wastewater Treatment and Water Environment Management Construction Services | 373,479 | 291,942 | | Property Sales | 368,481 | 282,323 | | Others | 916,398 | 816,377 | | **Total** | **6,472,791** | **5,131,231** | [Note 6: Segment Information](index=23&type=section&id=Note%206:%20Segment%20Information) The Group's operations are categorized into three main segments: urban water supply operation and construction, environmental protection, and property development and investment, with urban water supply being the core segment contributing the majority of revenue and profit Segment Results (For the Six Months Ended September 30, 2021) | Segment | Revenue (Thousand HKD) | Profit/(Loss) (Thousand HKD) | | :--- | :--- | :--- | | Urban Water Supply Operation and Construction | 5,145,701 | 1,927,368 | | Environmental Protection | 596,075 | 188,648 | | Property Development and Investment | 386,482 | 91,082 | | All Other Segments | 344,533 | (6,878) | | **Total** | **6,472,791** | **2,200,220** | [Note 11: Dividends](index=28&type=section&id=Note%2011:%20Dividends) The Board resolved to declare an interim dividend of **HKD 0.16** per ordinary share for the six months ended September 30, 2021, an increase from **HKD 0.15** in the prior year - The interim dividend is **HKD 0.16** per ordinary share, totaling approximately **HKD 261 million**[57](index=57&type=chunk) [Note 22: Business Combination](index=35&type=section&id=Note%2022:%20Business%20Combination) During the period, the Group acquired approximately **23.2%** equity in Nanjing Shuibeizi Technology Co., Ltd. for approximately **HKD 42.03 million** to gain board control, as part of its strategy to promote domestic piped direct drinking water business, resulting in goodwill of approximately **HKD 16.52 million** - The Group acquired approximately **23.2%** equity interest in Nanjing Shuibeizi Technology Co., Ltd. ("Nanjing Shuibeizi") for a total consideration of RMB 34.89 million (approximately **HKD 42.03 million**)[71](index=71&type=chunk) - This acquisition aims to promote the Group's piped direct drinking water business development in China, recognizing goodwill of **HKD 16.52 million**[71](index=71&type=chunk)[72](index=72&type=chunk) [Business Review, Corporate Governance and Other Information](index=39&type=section&id=Business%20Review,%20Corporate%20Governance%20and%20Other%20Information) [Business Review](index=40&type=section&id=Business%20Review) During the reporting period, the Group's total revenue significantly increased by **26.1%** to **HKD 6.47 billion**, with core segments 'Urban Water Supply Operation and Construction' and 'Environmental Protection' growing by **21.1%** combined, driven by increased construction and connection projects, improved operational efficiency, water price adjustments, and M&A activities - Revenue from the Urban Water Supply Operation and Construction segment increased by **21.4%** year-on-year to **HKD 5.15 billion**, with profit growing by **18.5%** to **HKD 1.93 billion**, primarily due to increased water sales volume, integrated urban-rural water supply, and direct drinking water business contributions[89](index=89&type=chunk) - Revenue from the Environmental Protection segment increased by **19.2%** year-on-year to **HKD 596 million**, with profit significantly growing by **42.0%** to **HKD 189 million**, mainly driven by increased construction projects from integrated water supply and drainage[90](index=90&type=chunk) - Revenue from the Property Development segment was **HKD 387 million**, with profit increasing by **41.7%** to **HKD 91.1 million**, primarily due to increased property project sales[91](index=91&type=chunk) [Future Prospects](index=43&type=section&id=Future%20Prospects) The Group elevates piped direct drinking water business as a core strategic focus for the next five years, aiming for a dual-main business structure alongside traditional tap water supply, while leveraging new national water pricing policies to enhance service levels and competitiveness for higher shareholder returns - Strategic Focus: Elevating the **piped direct drinking water business** as a core main business, developing it in parallel with traditional tap water supply to create new profit growth points[92](index=92&type=chunk) - Policy Opportunity: Leveraging the new 'Urban Water Supply Pricing Management Measures' issued by the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development to secure reasonable returns through incentive and restraint mechanisms, ensuring healthy development of the water supply business[92](index=92&type=chunk) [Liquidity and Financial Resources](index=44&type=section&id=Liquidity%20and%20Financial%20Resources) As of September 30, 2021, the Group held approximately **HKD 5.11 billion** in cash and deposits, with a gearing ratio of **64.1%**, and despite net current liabilities of **HKD 840 million**, the Board deems working capital sufficient given internal resources, available loans, and issued preference notes Liquidity Indicators | Indicator | September 30, 2021 | March 31, 2021 | | :--- | :--- | :--- | | Cash and Cash Equivalents and Pledged Deposits (Million HKD) | 5,112.7 | 4,416.3 | | Gearing Ratio | 64.1% | 64.0% | | Net Current Liabilities (Million HKD) | (844.0) | (1,670.4) | - In May 2021, the company successfully issued **USD 200 million** of 4.85% senior notes due 2026, using part of the proceeds to redeem **USD 150 million** of senior notes due 2022[93](index=93&type=chunk)

[Company Overview](index=2&type=section&id=Company%20Overview) This section provides an overview of China Water Affairs Group's corporate information, financial highlights, and core business operations [Company Information](index=2&type=section&id=Company%20Information) This section outlines China Water Affairs Group's fundamental corporate details, core business segments of water supply and environmental protection, and its extensive nationwide operational footprint - The company's core businesses are divided into two major segments: urban water supply operation and construction, and environmental protection (including sewage treatment, drainage operation, and water environment management)[8](index=8&type=chunk) - The water supply business has connected over **6.7 million users**, serves a potential population of over **30 million**, and operates approximately **155,000 kilometers of water pipelines** across multiple provinces and cities in China[8](index=8&type=chunk) [Financial Highlights](index=4&type=section&id=Financial%20Highlights) The Group achieved robust financial growth for FY2021, with total revenue increasing by 19.0% to HK$10.35 billion and adjusted profit attributable to owners rising by 21.6% to HK$1.73 billion, alongside improved asset and gearing ratios FY2021 Performance Summary | Metric | 2021 (HK$ Thousand) | 2020 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | **Revenue** | 10,345,533 | 8,694,303 | 19.0% | | **Gross Profit** | 4,338,584 | 3,758,485 | 15.4% | | **Profit for the Year** | 2,662,074 | 2,507,289 | 6.2% | | **Adjusted Profit Attributable to Owners of the Company** | 1,731,986 | 1,424,719 | 21.6% | | **Adjusted Basic Earnings Per Share (HK$)** | 1.09 | 0.89 | 22.5% | | **Total Dividend Per Share (HK Cents)** | 31 | 30 | 3.3% | FY2021 Balance Sheet Summary and Ratios | Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | **Total Assets (HK$ Thousand)** | 47,038,047 | 41,902,953 | 12.3% | | **Total Liabilities (HK$ Thousand)** | 30,088,019 | 27,804,450 | 8.2% | | **Net Assets (HK$ Thousand)** | 16,950,028 | 14,098,503 | 20.2% | | **Gearing Ratio** | 64.0% | 66.4% | -2.4 p.p. | - The water supply business is the Group's core revenue and profit source, with FY2021 revenue growing **18.3% to HK$8.54 billion** and profit increasing **14.8% to HK$3.39 billion**[21](index=21&type=chunk) - The environmental protection business also grew, with FY2021 revenue up **12.2% to HK$1.21 billion** and profit up **6.4% to HK$0.29 billion**[24](index=24&type=chunk) [Operations and Management](index=8&type=section&id=Operations%20and%20Management) This section details the Group's operational performance, strategic outlook, significant capital activities, and financial resource management [Chairman's Statement](index=8&type=section&id=Chairman%27s%20Statement) The Chairman's Statement reviews the Group's robust FY2021 performance, highlighting core business growth, strategic initiatives for sustainable expansion, and significant capital and financial developments [Financial Performance](index=9&type=section&id=Financial%20Performance) For the current fiscal year, total Group revenue increased by 19.0% to HK$10.35 billion, with adjusted profit attributable to owners rising 21.6% to HK$1.73 billion, and basic earnings per share growing 22.5% to HK$1.09 FY2021 Core Financial Data | Metric | Amount (HK$) | Year-on-Year Growth | | :--- | :--- | :--- | | **Revenue** | 10.35 billion | 19.0% | | **Gross Profit** | 4.34 billion | 15.4% | | **Adjusted Profit Attributable to Owners** | 1.73 billion | 21.6% | | **Adjusted Basic Earnings Per Share** | 1.09 | 22.5% | - The Board recommended a final dividend of **16 HK cents per share**, bringing the total annual dividend to **31 HK cents per share**, an increase from 30 HK cents last year[29](index=29&type=chunk) [Business Review](index=10&type=section&id=Business%20Review) All core business segments achieved stable growth, driven by increased water sales, integrated urban-rural water supply, and construction projects, though property business profit declined due to lower margins - Water supply business revenue reached **HK$8.54 billion**, a **18.3% year-on-year increase**, primarily driven by increased water sales, integrated urban-rural water supply, government and social capital cooperation models, and direct drinking water business contributions[33](index=33&type=chunk) - Environmental protection business revenue reached **HK$1.21 billion**, a **12.2% year-on-year increase**, mainly due to more construction projects driven by integrated water supply and drainage[34](index=34&type=chunk) - Property business segment profit decreased to **HK$31.3 million** from HK$42.1 million last year, primarily due to lower profit margins on property sales in the current year[35](index=35&type=chunk) [Future Outlook](index=11&type=section&id=Future%20Outlook) The Group plans to capitalize on national strategies by focusing on integrated urban-rural water supply and integrated water supply-drainage, accelerating M&A, and expanding direct drinking water and smart water services for new growth - The Group's strategic core is to develop businesses around "integrated urban-rural water supply" and "integrated water supply and drainage," while accelerating M&A activities[36](index=36&type=chunk) - The company will actively promote direct drinking water services and smart water solutions (e.g., "Fingertip Water Affairs App") to meet higher quality water demands and create new business and profit growth points[36](index=36&type=chunk) [Significant Capital Activities](index=12&type=section&id=Significant%20Capital%20Activities) During the year, the Group completed several major capital transactions, including issuing HK$361 million in convertible bonds to BPEA and issuing US$200 million in 4.85% senior notes due 2026, partially redeeming 2017 notes - On May 8, 2020, the company completed the issuance of convertible bonds with a total principal amount of approximately **HK$361 million** to BPEA[38](index=38&type=chunk) - In May 2021, the company issued **US$200 million** in 4.85% senior notes due 2026, and in June 2021, partially redeemed **US$150 million** of the 2017 notes using part of the proceeds[39](index=39&type=chunk) [Liquidity and Financial Resources](index=12&type=section&id=Liquidity%20and%20Financial%20Resources) As of March 31, 2021, the Group held approximately HK$4.42 billion in cash and cash equivalents, with the gearing ratio decreasing from 66.4% to 64.0%, and sufficient working capital despite current liabilities exceeding current assets Financial Resources Status | Metric | March 31, 2021 | March 31, 2020 | | :--- | :--- | :--- | | **Cash and cash equivalents and pledged deposits (HK$)** | Approx. 4.42 billion | Approx. 6.60 billion | | **Gearing Ratio** | 64.0% | 66.4% | | **Net Current Assets (HK$)** | (Approx. 1.67 billion) | Approx. 0.95 billion | [Directors' Report](index=26&type=section&id=Directors%27%20Report) This report outlines the Group's business operations, financial position, and corporate governance for the year ended March 31, 2021, covering key business review, dividend policy, risk factors, environmental policies, share capital changes, directors' interests, and connected transactions [Principal Activities and Dividends](index=27&type=section&id=Principal%20Activities%20and%20Dividends) The company's principal activity is investment holding, and the Board recommends a final dividend of 16 HK cents per ordinary share, subject to shareholder approval - The Directors recommended a final dividend of **16 HK cents per ordinary share**, consistent with the previous year[80](index=80&type=chunk) [Principal Risks and Uncertainties](index=28&type=section&id=Principal%20Risks%20and%20Uncertainties) The Group faces operational, liquidity, and legal/regulatory compliance risks, which are mitigated through established management and monitoring mechanisms like standard operating procedures and cash flow oversight - The Group identified three principal risks: operational risk (inadequate internal procedures, people, or systems), liquidity risk (inability to meet loan obligations), and legal and regulatory compliance risk (changes in government laws and regulations)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) [Share Capital and Securities](index=30&type=section&id=Share%20Capital%20and%20Securities) During the year ended March 31, 2021, the company repurchased 19,126,000 ordinary shares for approximately HK$117 million to enhance net asset value and earnings per share, and partially redeemed 2017 notes in June 2021 Annual Share Repurchase Summary | Period | Number of Shares Repurchased | Total Consideration (HK$) | | :--- | :--- | :--- | | **June to October 2020** | 19,126,000 | 116,878,000 | [Directors' and Major Shareholders' Interests](index=32&type=section&id=Directors%27%20and%20Major%20Shareholders%27%20Interests) This report discloses the shareholdings of directors, chief executives, and major shareholders in the company and its associated corporations as of March 31, 2021, including Chairman Duan Chuanliang's 29.71% stake and ORIX Corporation's 18.37% Major Shareholder Holdings (as of March 31, 2021) | Shareholder Name | Number of Shares Held (Long Position) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | | **Duan Chuanliang** | 470,880,301 | 29.71% | | **ORIX Corporation** | 291,170,277 | 18.37% | [Connected Transactions](index=35&type=section&id=Connected%20Transactions) During the year, the Group engaged in ongoing connected transactions with Jiangxi Yinli Direct Drinking Water Equipment Co Ltd, a related subsidiary, for the supply of direct drinking water system equipment and services, with actual transaction amounts well below the annual cap - The Group entered into a framework agreement with connected subsidiary Jiangxi Yinli for the supply of direct drinking water equipment and services; the actual transaction amount for the year was approximately **HK$5.761 million** (approximately RMB4.897 million), against an annual cap of RMB38 million[114](index=114&type=chunk)[115](index=115&type=chunk) [Corporate Governance](index=13&type=section&id=Corporate%20Governance) This section details the Group's corporate governance framework, including board composition, committee structures, and risk management practices [Biographies of Directors and Senior Management](index=13&type=section&id=Biographies%20of%20Directors%20and%20Senior%20Management) This section provides detailed biographical information for the company's Board of Directors and senior management, highlighting their extensive experience and professional qualifications across various fields relevant to the Group's operations - Chairman and Executive Director Mr. Duan Chuanliang is the founder of the Group's water business, possessing over **30 years of experience** in the water industry[46](index=46&type=chunk) - Board members and senior management possess diverse professional backgrounds, covering water engineering, financial management, capital markets, business administration, and accounting[46](index=46&type=chunk)[47](index=47&type=chunk)[53](index=53&type=chunk) [Corporate Governance Report](index=17&type=section&id=Corporate%20Governance%20Report) This report outlines the company's corporate governance practices during the reporting period, detailing adherence to the Corporate Governance Code, board and committee structures, and the risk management and internal control systems [Board and Committees](index=19&type=section&id=Board%20and%20Committees) The Board comprises fourteen directors, including five executive, four non-executive, and five independent non-executive directors, meeting listing rule requirements, with specialized committees ensuring independence and professionalism - During the reporting period, the company complied with all applicable provisions of the Corporate Governance Code, with deviations noted for A.2.1 (separation of Chairman and CEO roles), A.4.2 (Chairman's rotation), and A.6.7 (non-executive directors' attendance at general meetings)[54](index=54&type=chunk) - The Board established an Audit Committee, Remuneration Committee, and Nomination Committee; the Audit and Remuneration Committees are composed entirely of independent non-executive directors, while the Nomination Committee includes the Chairman and three independent non-executive directors[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[63](index=63&type=chunk) [Risk Management and Internal Control](index=24&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board holds ultimate responsibility for the Group's risk management and internal control systems, which have been reviewed annually and deemed effective and adequate, operating under a four-tier structure - The Group established a risk management framework comprising the Board, Audit Committee, management, and internal audit team, designed to manage rather than eliminate risks[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) - The Board reviewed the effectiveness of the risk management and internal control systems for the year and deemed them effective and adequate[74](index=74&type=chunk) [Auditor's Remuneration](index=26&type=section&id=Auditor%27s%20Remuneration) For the year ended March 31, 2021, audit services remuneration payable to PricewaterhouseCoopers amounted to HK$8.78 million, with non-audit services costing HK$0.2 million Auditor's Remuneration | Service Type | Amount (HK$) | | :--- | :--- | | **Audit Services** | 8,780,000 | | **Non-Audit Services** | 200,000 | [Financial Statements and Audit](index=37&type=section&id=Financial%20Statements%20and%20Audit) This section presents the Group's audited consolidated financial statements for the year ended March 31, 2021, along with the independent auditor's report and detailed notes explaining accounting policies and financial performance [Independent Auditor's Report](index=37&type=section&id=Independent%20Auditor%27s%20Report) PricewaterhouseCoopers issued an unmodified opinion on the Group's consolidated financial statements for the year ended March 31, 2021, affirming their fair presentation of the Group's financial position and performance, with key audit matters highlighted - The auditor concluded that the consolidated financial statements fairly present the Group's financial position in accordance with Hong Kong Financial Reporting Standards, issuing an unmodified opinion[120](index=120&type=chunk) - Key audit matters include: - Accounting for franchise service arrangements, involving judgment in applying HK(IFRIC)-Int 12[122](index=122&type=chunk)[123](index=123&type=chunk) - Impairment testing of other intangible assets and goodwill, involving significant judgments and assumptions regarding the recoverable amount of cash-generating units[128](index=128&type=chunk) [Consolidated Financial Statements](index=45&type=section&id=Consolidated%20Financial%20Statements) This section contains the Group's audited core financial statements for the year ended March 31, 2021, including the consolidated statement of profit or loss, comprehensive income, financial position, changes in equity, and cash flows FY2021 Key Financial Data (Consolidated Statements) | Metric | Amount (HK$ Thousand) | | :--- | :--- | | **Statement of Profit or Loss:** | | | Revenue | 10,345,533 | | Profit from operations | 3,687,055 | | Profit for the year | 2,662,074 | | Profit attributable to owners of the company | 1,692,464 | | **Statement of Financial Position (Period-end):** | | | Total Assets | 47,038,047 | | Total Liabilities | 30,088,019 | | Total Equity | 16,950,028 | | **Statement of Cash Flows:** | | | Net cash generated from operating activities | 2,653,702 | | Net cash used in investing activities | (3,982,910) | | Net cash used in financing activities | (518,064) | [Consolidated Statement of Profit or Loss](index=45&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) For the year ended March 31, 2021, the Group's revenue was HK$10.35 billion, a 19.0% year-on-year increase, with profit for the year at HK$2.66 billion and profit attributable to owners at HK$1.69 billion [Consolidated Statement of Comprehensive Income](index=46&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) Total comprehensive income for the year significantly increased to HK$3.60 billion from HK$1.68 billion last year, primarily due to the profit for the year and a HK$986 million currency translation gain, contrasting with a HK$833 million loss in the prior period [Consolidated Statement of Financial Position](index=47&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of March 31, 2021, the Group's total assets were HK$47.04 billion, total liabilities HK$30.09 billion, and total equity HK$16.95 billion, with other intangible assets (franchise rights) of HK$21.65 billion being the largest non-current asset [Consolidated Statement of Changes in Equity](index=49&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Equity attributable to owners of the company increased from HK$8.51 billion at the beginning of the year to HK$10.51 billion at year-end, primarily driven by total comprehensive income of HK$2.39 billion, partially offset by share repurchases and dividend payments [Consolidated Statement of Cash Flows](index=51&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Net cash generated from operating activities was HK$2.65 billion, while net cash used in investing activities was HK$3.98 billion, mainly for water supply and sewage treatment concessions, and net cash used in financing activities was HK$0.52 billion, resulting in a decrease in cash and cash equivalents to HK$3.90 billion [Notes to the Consolidated Financial Statements](index=54&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanations and supplementary information to the consolidated financial statements, covering key accounting policies, financial risk management, segment information, asset and liability breakdowns, business combinations, related party transactions, and post-reporting period events [Summary of Significant Accounting Policies](index=54&type=section&id=Summary%20of%20Significant%20Accounting%20Policies) This section details the Group's principal accounting policies for preparing the consolidated financial statements, including basis of preparation, consolidation principles, segment reporting, foreign currency translation, asset recognition and measurement, financial instruments, franchise service arrangements, revenue recognition, and taxation - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and on a going concern basis; despite current liabilities exceeding current assets as of March 31, 2021, the Directors believe the Group has sufficient working capital to meet future obligations[154](index=154&type=chunk) - Franchise service arrangements are a key area of the Group's accounting treatment, accounted for under HK(IFRIC)-Int 12, where consideration received or receivable for construction services is recognized as a financial asset or an intangible asset[196](index=196&type=chunk) [Financial Risk Management](index=82&type=section&id=Financial%20Risk%20Management) The Group manages key financial risks including credit, foreign currency, interest rate, price, and liquidity risks through credit policies, monitoring non-RMB borrowings, interest rate sensitivity analysis, and maintaining adequate cash levels - The Group's credit risk primarily arises from trade receivables, receivables from franchise service arrangements, and cash deposits; management considers the counterparties to be mainly local governments or state-owned enterprises, thus credit risk is not high[222](index=222&type=chunk)[224](index=224&type=chunk) - Interest rate sensitivity analysis indicates that a **100 basis point increase** in interest rates would decrease the Group's profit after tax by approximately **HK$140 million**[228](index=228&type=chunk) - In terms of capital management, the Group's capital-to-total financing ratio (total equity / (borrowings + payables)) increased from **0.78 times to 0.89 times**[251](index=251&type=chunk) [Segment Information](index=99&type=section&id=Segment%20Information) The Group operates in three reportable segments: urban water supply operation and construction, environmental protection, and property development and investment, with urban water supply being the largest contributor to revenue and profit FY2021 Segment Performance | Segment | Revenue (HK$ Thousand) | Segment Profit (HK$ Thousand) | | :--- | :--- | :--- | | **Urban Water Supply Operation and Construction** | 8,543,997 | 3,392,227 | | **Environmental Protection** | 1,205,244 | 293,988 | | **Property Development and Investment** | 333,230 | 31,274 | | **All Other Segments** | 263,062 | 23,382 | [Revenue and Other Income](index=98&type=section&id=Revenue%20and%20Other%20Income) This section details the composition of the Group's total revenue of HK$10.35 billion, with water supply construction services, water supply operation services, and water connection income being the largest contributors, and other income primarily from interest and government subsidies FY2021 Revenue Composition | Item | Amount (HK$ Thousand) | | :--- | :--- | | **Water supply construction services** | 3,685,793 | | **Water supply operation services** | 2,820,858 | | **Water connection income** | 1,912,686 | | **Sewage treatment and water environment management construction services** | 747,140 | | **Others** | 1,178,956 | | **Total** | **10,345,533** | [Key Balance Sheet Items](index=109&type=section&id=Key%20Balance%20Sheet%20Items) This section details key balance sheet items as of March 31, 2021, including other intangible assets (franchise rights) at HK$21.65 billion, goodwill at HK$1.41 billion, property, plant and equipment at HK$2.86 billion, and total borrowings at HK$18.43 billion - Other intangible assets (primarily water supply franchise rights) are the Group's most significant asset, with a net book value of **HK$21.65 billion**, a significant increase from HK$17.56 billion last year[329](index=329&type=chunk) - The Group's total borrowings amounted to **HK$18.43 billion**, comprising HK$5.26 billion in current borrowings and HK$13.17 billion in non-current borrowings[363](index=363&type=chunk) [Business Combinations and Disposals](index=138&type=section&id=Business%20Combinations%20and%20Disposals) During the year, the Group acquired 100% equity in Huojiaxian Xinshui Water Affairs Co Ltd for approximately HK$108 million, resulting in HK$54.06 million in goodwill, and also disposed of several subsidiaries, recognizing a net loss of approximately HK$3.16 million - The Group acquired **100% equity** in Huojiaxian Xinshui Water Affairs for approximately **HK$108 million** in cash consideration, resulting in **HK$54.06 million** in goodwill[386](index=386&type=chunk)[387](index=387&type=chunk) - The Group disposed of several subsidiaries, recognizing a net loss on disposal of approximately **HK$3.16 million**[396](index=396&type=chunk) [Related Party Transactions](index=143&type=section&id=Related%20Party%20Transactions) Aside from directors' and key management's remuneration, a significant related party transaction for the year involved providing construction services to a subsidiary of associate company Kangda International, totaling approximately HK$97.14 million - The Group provided construction services to a subsidiary of associate company Kangda International, with transaction amounts totaling approximately **HK$97.14 million**[404](index=404&type=chunk) [Events After the Reporting Period](index=161&type=section&id=Events%20After%20the%20Reporting%20Period) Subsequent to the reporting period, the company issued US$200 million in 4.85% senior notes due 2026 in May 2021 and partially redeemed US$150 million of the 2017 notes in June 2021 to optimize its debt structure - In May 2021, the company issued **US$200 million** in 4.85% senior notes due 2026, and in June, partially redeemed **US$150 million** of the 2017 notes[444](index=444&type=chunk) [Appendix](index=161&type=section&id=Appendix) This section provides supplementary information, including detailed property holdings and a five-year financial summary illustrating the Group's historical performance trends [Property Details](index=161&type=section&id=Property%20Details) This section details the Group's major investment properties, properties under development, and properties held for sale as of March 31, 2021, including location, type, ownership percentage, and development stage - The Group holds various residential, industrial, and commercial properties in Beijing, Chongqing, Jiangxi, Hubei, and other locations, which are either investment properties, properties under development, or completed properties held for sale[445](index=445&type=chunk)[446](index=446&type=chunk)[447](index=447&type=chunk) [Five-Year Financial Summary](index=164&type=section&id=Five-Year%20Financial%20Summary) This section provides a summary of the Group's key financial data for the past five fiscal years (2017-2021), demonstrating consistent growth in revenue, profit, assets, and equity, with revenue increasing from HK$5.71 billion to HK$10.35 billion Five-Year Financial Data Summary (As of March 31) | Metric (HK$ Thousand) | 2021 | 2020 | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | 10,345,533 | 8,694,303 | 8,302,211 | 7,580,176 | 5,707,895 | | **Profit for the Year** | 2,662,074 | 2,507,289 | 2,130,283 | 1,761,524 | 1,379,346 | | **Profit Attributable to Owners of the Company** | 1,692,464 | 1,639,495 | 1,369,235 | 1,140,518 | 853,634 | | **Total Assets** | 47,038,047 | 41,902,953 | 35,824,636 | 28,589,287 | 25,631,709 | | **Equity Attributable to Owners of the Company** | 10,512,543 | 8,507,710 | 7,970,466 | 7,168,584 | 5,615,304 |

[Company Information](index=2&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) [Company Overview](index=2&type=section&id=%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) This section provides fundamental company information, including board members, committee structures, registered office, principal place of business, and key partners such as auditors and bankers - The Board of Directors comprises executive, non-executive, and independent non-executive directors, with sub-committees for audit, remuneration, and nomination[5](index=5&type=chunk)[6](index=6&type=chunk) [Financial Summary](index=4&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) [Performance and Balance Sheet Summary](index=4&type=section&id=%E6%A5%AD%E7%B8%BE%E8%88%87%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5%E6%91%98%E8%A6%81) The Group achieved robust financial growth in FY2019, with total revenue increasing by **9.5%** to **HKD 8.3 billion**, profit attributable to owners growing by **20.1%** to **HKD 1.37 billion**, total assets and net assets rising by **25.3%** and **15.7%** respectively, and total dividends per share increasing by **21.7%** FY2019 Performance Summary | Metric | 2019 (HKD Thousands) | 2018 (HKD Thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 8,302,211 | 7,580,176 | 9.5% | | Gross Profit | 3,463,839 | 3,270,636 | 5.9% | | Profit for the Year | 2,130,283 | 1,761,524 | 20.9% | | Profit Attributable to Owners of the Company | 1,369,235 | 1,140,518 | 20.1% | | Basic Earnings Per Share (HK Cents) | 85.10 | 72.62 | 17.2% | | Total Dividends Per Share (HK Cents) | 28 | 23 | 21.7% | FY2019 Balance Sheet Summary | Metric | 2019 (HKD Thousands) | 2018 (HKD Thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 35,824,636 | 28,589,287 | 25.3% | | Total Liabilities | 22,922,166 | 17,434,878 | 31.5% | | Net Assets | 12,902,470 | 11,154,409 | 15.7% | | Gearing Ratio | 64.0% | 61.0% | - | [Business Segment Performance](index=5&type=section&id=%E6%A5%AD%E5%8B%99%E5%88%86%E9%83%A8%E8%A1%A8%E7%8F%BE) The Group's operations primarily consist of water supply and environmental protection businesses, with water supply remaining the main revenue and profit source, contributing **87.5%** of total segment profit, while the environmental protection business demonstrated strong growth with **87.1%** revenue and **63.8%** profit increases - The water supply business is the Group's core, contributing the majority of revenue and profit, with FY2019 revenue of **HKD 6.38 billion** (up **2.8%**) and segment profit of **HKD 2.62 billion** (up **9.0%**)[14](index=14&type=chunk)[25](index=25&type=chunk) - The environmental protection business achieved rapid growth in FY2019, with revenue reaching **HKD 1.52 billion** (up **87.1%**) and segment profit reaching **HKD 440 million** (up **63.8%**), primarily driven by facility upgrades and increased water environment treatment construction services[16](index=16&type=chunk)[26](index=26&type=chunk) FY2019 Segment Profit Composition | Business Segment | Profit (HKD Millions) | % of Total Segment Profit | | :--- | :--- | :--- | | Water Supply Business | 2,618.7 | 87.5% | | Environmental Protection Business | 443.9 | 14.8% | | Others | (69.6) | (2.3%) | | **Total** | **2,993.0** | **100%** | [Chairman's Statement](index=8&type=section&id=%E4%B8%BB%E5%B8%AD%E5%A0%B1%E5%91%8A%E6%9B%B8) [Financial and Business Review](index=8&type=section&id=%E8%B2%A1%E5%8B%99%E8%88%87%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) The Chairman's Statement highlights the Group's strong FY2019 performance, with core businesses (urban water supply operations and construction, environmental protection) achieving **12.6%** combined revenue growth and **14.6%** combined profit growth, while property business recorded a loss due to reduced sales of high-margin projects - The Group's core segments, 'Urban Water Supply Operations and Construction' and 'Environmental Protection', achieved combined revenue of **HKD 7.9 billion**, a **12.6%** year-on-year increase, and combined segment profit of **HKD 3.06 billion**, a **14.6%** year-on-year increase[20](index=20&type=chunk)[24](index=24&type=chunk) - Water supply business revenue increased by **2.8%** to **HKD 6.38 billion**, with profit growing by **9.0%** to **HKD 2.62 billion**[25](index=25&type=chunk) - Environmental protection business revenue surged by **87.1%** to **HKD 1.52 billion**, and profit significantly increased by **63.8%** to **HKD 440 million**[26](index=26&type=chunk) - The property business segment recorded a loss of **HKD 78.7 million**, compared to a profit of **HKD 88.9 million** in the prior year, primarily due to reduced sales of high-margin projects[27](index=27&type=chunk) [Future Outlook and Strategy](index=10&type=section&id=%E6%9C%AA%E4%BE%86%E5%B1%95%E6%9C%9B%E8%88%87%E7%AD%96%E7%95%A5) Despite macroeconomic uncertainties, the Group will leverage national policy support like PPP models and Greater Bay Area development opportunities to expand business scale, optimize asset portfolios, and accelerate new ventures such as secondary water supply and direct drinking water, focusing on 'urban-rural water supply integration' and 'supply-drainage integration' - The Group will continue to adopt government-encouraged Public-Private Partnership (PPP) models to expand its business in infrastructure and public service sectors[28](index=28&type=chunk) - Core development will focus on 'urban-rural water supply integration' and 'supply-drainage integration', while accelerating the expansion of secondary water supply, direct drinking water businesses, and smart pipeline network system construction[28](index=28&type=chunk) [Liquidity, Financial Resources, and Risk Management](index=11&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E3%80%81%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90%E8%88%87%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86) As of March 31, 2019, the Group maintained a sound financial position with total cash and equivalents of approximately **HKD 4.62 billion**, a gearing ratio of **64.0%**, and a current ratio of **1.13x**, managing foreign exchange risk from RMB-denominated transactions by monitoring non-RMB borrowings and detailing various pledged assets for loan financing Financial Position Indicators (As of March 31, 2019) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Total Cash and Cash Equivalents and Pledged Deposits | HKD 4.62 billion | HKD 3.08 billion | | Gearing Ratio | 64.0% | 61.0% | | Current Ratio | 1.13x | 1.04x | - The majority of the Group's transactions are denominated in RMB, exposing net assets to exchange rate fluctuations, which the Group manages by monitoring the proportion of non-RMB borrowings rather than using derivative financial instruments for hedging[32](index=32&type=chunk) - The Group pledged various assets to secure loan financing, including water supply revenue, shares in subsidiaries, property, plant and equipment, land use rights, investment properties, intangible assets, and bank deposits[33](index=33&type=chunk)[34](index=34&type=chunk) [Biographies of Directors and Senior Management](index=13&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E4%BA%BA%E5%93%A1%E5%B1%A5%E6%AD%B7) [Biographies of Directors and Senior Management](index=13&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E9%AB%98%E7%B4%9A%E7%AE%A1%E7%90%86%E4%BA%BA%E5%93%A1%E5%B1%A5%E6%AD%B7) This section details the backgrounds, professional qualifications, and industry experience of the company's executive, non-executive, independent non-executive directors, and senior management, highlighting the management team's extensive experience in water conservancy, financial management, capital markets, and corporate administration - Chairman Mr. Duan Chuanliang, a graduate of North China University of Water Conservancy and Hydropower, possesses a profound background in the water conservancy industry, having served at the Ministry of Water Resources of China for over a decade[36](index=36&type=chunk) - Board members and senior management generally possess professional backgrounds in finance, accounting, engineering, and business administration, accumulating over **15 to 40 years** of extensive experience in their respective fields[36](index=36&type=chunk)[38](index=38&type=chunk)[42](index=42&type=chunk) [Corporate Governance Report](index=16&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%A0%B1%E5%91%8A) [Corporate Governance Practices](index=16&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F) The company is committed to maintaining high corporate governance standards, complying with most Code on Corporate Governance Practices provisions during the reporting period, while disclosing three deviations related to the roles of Chairman and CEO, Chairman's retirement by rotation, and non-attendance of some directors at the AGM, along with their justifications - The company reported three deviations from the Code on Corporate Governance Practices: - **Code Provision A.2.1**: The roles of Chairman and Chief Executive Officer are not segregated, with executive directors jointly assuming CEO responsibilities, a structure the Board believes facilitates swift decision-making - **Code Provision A.4.2**: The company's articles of association stipulate that the Chairman is not subject to retirement by rotation, which the Board believes contributes to leadership continuity and long-term strategy execution - **Code Provision A.6.7**: Some non-executive directors were unable to attend the 2018 Annual General Meeting due to other commitments[43](index=43&type=chunk) [Board and Committees](index=17&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%8F%8A%E5%A7%94%E5%93%A1%E6%9C%83) The Board of Directors, comprising **12** members, is responsible for business strategy and performance oversight, supported by Audit, Remuneration, and Nomination Committees with detailed compositions and functions, all of which held meetings during the reporting period to fulfill their duties and adopted a board diversity policy - The Board of Directors consists of **4** executive directors, **4** non-executive directors, and **4** independent non-executive directors, complying with listing rule requirements[46](index=46&type=chunk) - The Audit and Remuneration Committees are composed entirely of independent non-executive directors, while the Nomination Committee comprises one executive director and three independent non-executive directors[49](index=49&type=chunk)[50](index=50&type=chunk)[53](index=53&type=chunk) - The company adopted a board diversity policy, considering factors such as gender, age, cultural background, and professional experience[54](index=54&type=chunk) [Risk Management and Internal Control](index=22&type=section&id=%E9%A2%A8%E9%9A%AA%E7%AE%A1%E7%90%86%E5%8F%8A%E5%85%A7%E9%83%A8%E7%9B%A3%E6%8E%A7) The Board holds ultimate responsibility for the Group's risk management and internal control systems, regularly reviewing their effectiveness, and has established a multi-tiered risk management structure involving the Board, Audit Committee, management, and internal audit team, which was deemed effective and adequate during the reporting period - The Group's risk management framework clearly defines the responsibilities of the Board, Audit Committee, management, and internal audit team[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - The internal audit team reports directly to the Audit Committee, responsible for assessing the effectiveness of the risk management and internal control systems[63](index=63&type=chunk) - The Board reviewed the risk management and internal control systems for the reporting year and deemed them effective and adequate[63](index=63&type=chunk) [Shareholder Rights and Communication](index=24&type=section&id=%E8%82%A1%E6%9D%B1%E6%AC%8A%E5%88%A9%E5%8F%8A%E6%BA%9D%E9%80%9A) The company communicates with shareholders through various channels, including announcements, financial reports, and general meetings, with shareholders holding at least **10%** of paid-up share capital able to request an extraordinary general meeting, and a dividend policy targeting a payout ratio of no less than **30%** of basic earnings per share for each financial year - Shareholders holding not less than **10%** of the paid-up share capital may request the Board to convene an extraordinary general meeting[66](index=66&type=chunk) - The company has adopted a dividend policy targeting a payout ratio of no less than **30%** of basic earnings per share[67](index=67&type=chunk) [Directors' Report](index=25&type=section&id=%E8%91%A3%E4%BA%8B%E6%9C%83%E5%A0%B1%E5%91%8A%E6%9B%B8) [Performance, Dividends, and Principal Risks](index=25&type=section&id=%E6%A5%AD%E7%B8%BE%E3%80%81%E8%82%A1%E6%81%AF%E8%88%87%E4%B8%BB%E8%A6%81%E9%A2%A8%E9%9A%AA) This section outlines the Group's performance and dividend distribution plan, identifying three principal risks: operational, liquidity, and legal and regulatory compliance, for which the Board recommends a final dividend of **HKD 0.16** per share and has implemented corresponding management and mitigation measures - The Board recommends a final dividend of **HKD 0.16** per share, bringing the total annual dividend to **HKD 0.28** per share, including the interim dividend[21](index=21&type=chunk)[69](index=69&type=chunk) - The Group identified principal risks including: - **Operational Risk**: Risk of loss resulting from inadequate internal processes, people, or systems - **Liquidity Risk**: Risk of inability to meet loan agreement obligations - **Legal and Regulatory Compliance Risk**: Potential impact from changes in Chinese government laws and regulations[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) [Environmental Policy and Compliance](index=27&type=section&id=%E7%92%B0%E4%BF%9D%E6%94%BF%E7%AD%96%E8%88%87%E5%90%88%E8%A6%8F) The Group is committed to environmental sustainability and compliance with relevant environmental laws and regulations, achieving energy conservation and emission reduction through careful site selection, process improvements, reduced pipeline leakage rates, and increased clean energy use, while also standardizing waste management to ensure compliant discharge - The Group implemented various environmental measures, including optimizing water plant locations to utilize gravity flow, undertaking process improvements to introduce energy-saving equipment, reducing pipeline leakage rates, and installing solar power generation devices[77](index=77&type=chunk) - During the reporting period, the Group consistently complied in all material respects with relevant laws and regulations significantly impacting its operations[78](index=78&type=chunk) [Share Capital, Reserves, and Major Shareholders](index=28&type=section&id=%E8%82%A1%E6%9C%AC%E3%80%81%E5%84%B2%E5%82%99%E8%88%87%E4%B8%BB%E8%A6%81%E8%82%A1%E6%9D%B1) During the reporting period, the company did not purchase, sell, or redeem any listed securities, with distributable reserves amounting to **HKD 681 million** as of March 31, 2019, and major shareholders including Mr. Duan Chuanliang (approximately **29.16%** stake) and ORIX Corporation (approximately **18.10%** stake) - As of March 31, 2019, the company's distributable reserves amounted to **HKD 680,987,000**[81](index=81&type=chunk) Major Shareholder Holdings (As of March 31, 2019) | Shareholder Name | Number of Shares Held (Long Position) | Approximate Shareholding Percentage | | :--- | :--- | :--- | | Duan Chuanliang | 469,120,301 | 29.16% | | ORIX Corporation | 291,170,277 | 18.10% | | Asset Full Resources Limited | 218,044,301 | 13.55% | [Connected Transactions](index=33&type=section&id=%E9%97%9C%E9%80%A3%E4%BA%A4%E6%98%93) During the reporting period, the Group engaged in two discloseable connected transactions: the subscription of approximately **4.39%** equity in subsidiary Jinda Environmental Protection by certain connected persons, and the establishment of a joint venture with an affiliate of major shareholder ORIX Corporation for direct drinking water equipment business - Connected persons of the Group, including certain directors and employees, subscribed for approximately **4.39%** equity in subsidiary Jinda Environmental Protection Investment (Shenzhen) Co Ltd, with a total subscription price of approximately **RMB 138 million**[99](index=99&type=chunk) - The Group established a joint venture with Toray Industries, Inc. and ORIX (China) Investment Co Ltd (a connected person) to engage in the production and sale of piped direct drinking water equipment, with the company contributing **RMB 27.5 million** for a **55%** stake[100](index=100&type=chunk) [Independent Auditor's Report](index=35&type=section&id=%E7%8D%A8%E7%AB%8B%E6%A0%B8%E6%95%B8%E5%B8%AB%E5%A0%B1%E5%91%8A) [Independent Auditor's Report](index=35&type=section&id=%E7%8D%A8%E7%AB%8B%E6%A0%B8%E6%95%B8%E5%B8%AB%E5%A0%B1%E5%91%8A) PricewaterhouseCoopers issued an unmodified opinion on the Group's consolidated financial statements for the year ended March 31, 2019, affirming that the statements present a true and fair view of the Group's financial position, performance, and cash flows, with key audit matters highlighted as the accounting treatment for service concession arrangements and impairment testing of other intangible assets and goodwill - The auditor's opinion was unmodified, stating that the consolidated financial statements present a true and fair view of the Group's financial position and performance in accordance with Hong Kong Financial Reporting Standards[103](index=103&type=chunk) - Key audit matters include: - **Accounting for Service Concession Arrangements**: Involves assessing the applicability of HK(IFRIC)-Int 12 and recognizing construction service revenue and costs, requiring significant management judgment - **Impairment Testing of Other Intangible Assets and Goodwill**: Involves assessing indicators of impairment and significant judgments and assumptions in calculating value in use[105](index=105&type=chunk)[106](index=106&type=chunk)[109](index=109&type=chunk) [Consolidated Financial Statements](index=43&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) [Consolidated Financial Statements](index=43&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) This section presents the Group's audited core financial statements, including the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, and consolidated statement of cash flows, comprehensively reflecting the Group's FY2019 financial performance, position, and cash flows FY2019 Core Financial Data | Metric | Amount (HKD Thousands) | | :--- | :--- | | **Consolidated Statement of Profit or Loss** | | | Revenue | 8,302,211 | | Profit for the Year | 2,130,283 | | Profit Attributable to Owners of the Company | 1,369,235 | | **Consolidated Statement of Financial Position (Period End)** | | | Total Assets | 35,824,636 | | Total Liabilities | 22,922,166 | | Total Equity | 12,902,470 | | **Consolidated Statement of Cash Flows** | | | Net Cash Generated from Operating Activities | 1,018,048 | | Net Cash Used in Investing Activities | (3,369,803) | | Net Cash Generated from Financing Activities | 3,809,264 | [Notes to the Consolidated Financial Statements](index=52&type=section&id=%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) [Summary of Significant Accounting Policies](index=52&type=section&id=%E4%B8%BB%E8%A6%81%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E6%A6%82%E8%A6%81) This section details the Group's significant accounting policies for preparing consolidated financial statements, notably the first-time adoption of HKFRS 9 Financial Instruments and HKFRS 15 Revenue from Contracts with Customers this year with retrospective adjustments, covering key areas such as consolidation, segment reporting, foreign currency translation, recognition and measurement of various assets and liabilities, and revenue recognition - This year, the Group first adopted HKFRS 9 Financial Instruments and HKFRS 15 Revenue from Contracts with Customers, applying a modified retrospective approach, with the cumulative effect recognized in the opening retained earnings balance as of April 1, 2018[143](index=143&type=chunk)[230](index=230&type=chunk) - The Group's reportable segments are identified as 'Urban Water Supply Operations and Construction', 'Environmental Protection', and 'Property Development and Investment'[160](index=160&type=chunk) - The accounting treatment for service concession arrangements (e.g., BOT, TOT projects) is detailed, where consideration for construction services is recognized as a financial asset or an intangible asset based on the unconditional right to receive cash[202](index=202&type=chunk) [Segment Information](index=100&type=section&id=%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) This note provides detailed financial data for each business segment: Urban Water Supply Operations and Construction, the largest segment, contributed **HKD 6.38 billion** in revenue and **HKD 2.62 billion** in profit; Environmental Protection segment generated **HKD 1.52 billion** in revenue and **HKD 440 million** in profit; and Property Development and Investment segment recorded **HKD 290 million** in revenue and a **HKD 78.69 million** loss FY2019 Segment Results (HKD Thousands) | Segment | Revenue (HKD Thousands) | Segment Profit/(Loss) (HKD Thousands) | Segment Assets (HKD Thousands) | | :--- | :--- | :--- | :--- | | Urban Water Supply Operations and Construction | 6,376,124 | 2,618,675 | 19,240,003 | | Environmental Protection | 1,522,337 | 443,948 | 3,968,766 | | Property Development and Investment | 291,043 | (78,692) | 3,299,609 | | All Other Segments | 112,707 | 9,118 | 2,462,175 | [Business Combinations and Disposals](index=138&type=section&id=%E6%A5%AD%E5%8B%99%E5%90%88%E4%BD%B5%E8%88%87%E5%87%BA%E5%94%AE) In FY2019, the Group completed multiple business combinations, primarily expanding water supply operations in Gong'an, Wuhan, Jiaxian, Hanchuan, and Dianjiang through joint ventures or direct acquisitions, and acquired a liquefied natural gas supply company, while also disposing of its entire interest in Xinyu Fairy Lake Cruise Co Ltd, recognizing a disposal gain of approximately **HKD 106 million** - Major acquisitions during the year included establishing joint ventures with local governments (Gong'an Yinlong Water, Jiaxian Yinlong Water, Dianjiang Water), acquiring **91.79%** equity in Wuhan Xinzhou, **100%** equity in Hanchuan Water, and **70%** equity in Create Capital, resulting in total goodwill of approximately **HKD 419 million**[410](index=410&type=chunk)[414](index=414&type=chunk)[419](index=419&type=chunk)[422](index=422&type=chunk)[428](index=428&type=chunk)[436](index=436&type=chunk) - The Group disposed of its entire interest in Xinyu Fairy Lake Cruise Co Ltd, recording a disposal gain of approximately **HKD 106 million**[442](index=442&type=chunk) [Events After Reporting Period](index=168&type=section&id=%E5%A0%B1%E5%91%8A%E6%9C%9F%E5%BE%8C%E4%BA%8B%E9%A0%85) Subsequent to the reporting period, in April 2019, the Group completed a significant acquisition of approximately **29.52%** equity in Kangda International Environmental Company Limited (stock code: 6136) for a total consideration of **HKD 1.2 billion**, a company primarily engaged in urban water treatment and related businesses - On April 4, 2019, the Group completed the acquisition of approximately **29.52%** equity in Kangda International Environmental Company Limited (stock code: 6136) for **HKD 1.2 billion**[493](index=493&type=chunk) [Appendix](index=169&type=section&id=%E9%99%84%E9%8C%84) [Property Details](index=169&type=section&id=%E7%89%A9%E6%A5%AD%E8%A9%B3%E6%83%85) This section details the location, type, equity percentage, and development stage of the Group's investment properties, properties under development, and properties held for sale, primarily located in Beijing, Chongqing, Jiangxi, and Hubei in China - The Group's investment properties, properties under development, and properties held for sale are primarily located in Chinese provinces and cities such as Beijing, Chongqing, Jiangxi, and Hubei[495](index=495&type=chunk)[497](index=497&type=chunk)[499](index=499&type=chunk) [Five-Year Financial Summary](index=172&type=section&id=%E4%BA%94%E5%B9%B4%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) This section provides key financial data for the Group's past five fiscal years, demonstrating a continuous growth trend, with revenue increasing from **HKD 3.62 billion** in 2015 to **HKD 8.30 billion** in 2019, and equity attributable to owners growing from **HKD 4.54 billion** to **HKD 7.97 billion** Five-Year Financial Data Summary (For the year ended March 31, HKD Thousands) | Metric | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 8,302,211 | 7,580,176 | 5,707,895 | 4,739,902 | 3,622,109 | | Profit Before Income Tax | 2,772,059 | 2,462,111 | 1,962,625 | 1,505,226 | 1,242,018 | | Profit Attributable to Owners of the Company | 1,369,235 | 1,140,518 | 853,634 | 608,112 | 532,815 | | Total Assets | 35,824,636 | 28,589,287 | 25,631,709 | 19,971,063 | 16,075,613 | | Equity Attributable to Owners of the Company | 7,970,466 | 7,168,584 | 5,615,304 | 5,263,372 | 4,537,974 |