中国水务(00855) - 2021 - 年度财报

Company Overview This section provides an overview of China Water Affairs Group's corporate information, financial highlights, and core business operations Company Information 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] - 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] Financial Highlights 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] - 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] Operations and Management This section details the Group's operational performance, strategic outlook, significant capital activities, and financial resource management Chairman's Statement 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 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] Business Review 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] - 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] - 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] Future Outlook 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] - 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] Significant Capital Activities 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] - 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] Liquidity and Financial Resources 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 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 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] Principal Risks and Uncertainties 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][85][86] Share Capital and Securities 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 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 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][115] Corporate Governance This section details the Group's corporate governance framework, including board composition, committee structures, and risk management practices Biographies of Directors and Senior Management 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] - Board members and senior management possess diverse professional backgrounds, covering water engineering, financial management, capital markets, business administration, and accounting[46][47][53] Corporate Governance Report 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 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] - 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][59][60][63] Risk Management and Internal Control 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][71][72][73] - The Board reviewed the effectiveness of the risk management and internal control systems for the year and deemed them effective and adequate[74] Auditor's Remuneration 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 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 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] - Key audit matters include: - Accounting for franchise service arrangements, involving judgment in applying HK(IFRIC)-Int 12[122][123] - Impairment testing of other intangible assets and goodwill, involving significant judgments and assumptions regarding the recoverable amount of cash-generating units[128] Consolidated Financial Statements 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 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 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 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 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 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 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 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] - 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] Financial Risk Management 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][224] - 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$140 million[228] - In terms of capital management, the Group's capital-to-total financing ratio (total equity / (borrowings + payables)) increased from 0.78 times to 0.89 times[251] Segment Information The Group operates in three reportable segments: urban water supply operation and construction, environmental protection, and property development and investment, with urban water supply being the largest contributor to revenue and profit FY2021 Segment Performance | Segment | Revenue (HK$ 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 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 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] - 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] Business Combinations and Disposals 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][387] - The Group disposed of several subsidiaries, recognizing a net loss on disposal of approximately HK$3.16 million[396] Related Party Transactions 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] Events After the Reporting Period 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] 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 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][446][447] Five-Year Financial Summary 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 |