台州水务(01542) - 2021 - 中期财报

Company Information This section provides fundamental details about the company Financial Highlights This section summarizes the company's key financial performance and position Performance Summary The company achieved revenue of RMB 260 million in H1 2021, a 15.7% YoY increase, with profit for the period rising 38.7% to RMB 68.81 million Performance Summary (RMB thousands) | Indicator | Six Months Ended June 30, 2021 (RMB thousands) | Six Months Ended June 30, 2020 (RMB thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 259,779 | 224,455 | +15.7% | | Profit Before Tax | 92,749 | 67,242 | +37.9% | | Profit and Other Comprehensive Income for the Period | 68,807 | 49,641 | +38.6% | | Profit Attributable to Owners of the Parent Company | 60,892 | 43,582 | +39.7% | | Basic Earnings Per Share Attributable to Ordinary Equity Holders of the Parent Company (RMB) | 0.30 | 0.22 | +36.4% | Assets and Liabilities Summary As of June 30, 2021, total assets reached RMB 4.069 billion, up 16.1%, while total liabilities increased 21.5% to RMB 3.020 billion, driven by ongoing construction projects and related borrowings Assets and Liabilities Summary (RMB thousands) | Indicator | As of June 30, 2021 (RMB thousands) | As of December 31, 2020 (RMB thousands) | Period Change | | :--- | :--- | :--- | :--- | | Total Assets | 4,068,609 | 3,503,056 | +16.1% | | Total Liabilities | 3,019,655 | 2,484,553 | +21.5% | | Total Equity | 1,048,954 | 1,018,503 | +3.0% | Management Discussion and Analysis This section provides insights into the company's operations, financial performance, and future outlook Industry Overview, Development Strategy, and Outlook The company is strategically positioned as a comprehensive water and environmental resource development operator, expanding its market presence and exploring new growth areas in ecological protection - The company is positioned as a "comprehensive water and environmental resource development operator", initiating water integration efforts by acquiring equity stakes in other Taizhou City water companies to expand industrial scale and consolidate market position[15] - The Group plans to expand its business into ecological and environmental sectors, including wastewater treatment, reclaimed water reuse, and solid waste disposal, and foster industry-academia-research collaboration for development[15] Business Review As Taizhou City's leading water supply provider, the company saw year-on-year sales volume growth across all segments and is actively progressing major water supply system projects and regional water integration acquisitions - The company signed agreements in May 2021 to acquire 45% equity stakes in Taizhou Tap Water, Jiaobei Water Supply, and Luqiao Tap Water, aiming to expand its water supply network coverage and enhance overall profitability[17] Sales Volume by Business Segment | Business Segment | 2021 H1 Sales Volume (Million Tons) | 2020 H1 Sales Volume (Million Tons) | YoY Growth | | :--- | :--- | :--- | :--- | | Raw Water Supply | 58.5 | 54.2 | +7.9% | | Municipal Water Supply | 70.3 | 62.2 | +13.0% | | Tap Water Supply | 5.2 | 4.7 | +10.6% | - Construction of Taizhou City Water Supply System (Phase III) and (Phase IV) projects is progressing smoothly, with water treatment plant complex buildings and basic treatment facilities completed and accepted, expected to be finished in February and April 2022, respectively[18] Financial Review In H1 2021, the company's total revenue grew 15.7% to RMB 260 million, with gross profit surging 30.6% to RMB 118 million, and net profit increasing 38.7% to RMB 68.8 million, despite an increase in total borrowings to support project construction Operating Performance Analysis Revenue grew 15.7% to RMB 260 million, driven by municipal water supply and installation services, leading to a 30.6% increase in gross profit to RMB 118 million and a 38.7% rise in profit after tax to RMB 68.8 million Revenue by Segment (RMB millions) | Revenue Segment | 2021 H1 (RMB millions) | 2020 H1 (RMB millions) | YoY Growth | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Raw Water Supply | 59.5 | 54.1 | +10.0% | Increased sales volume | | Municipal Water Supply | 171.6 | 147.4 | +16.4% | Increased sales volume and higher average unit price | | Tap Water Supply | 21.9 | 19.6 | +11.7% | Increased sales volume | | Installation Services | 6.8 | 3.4 | +100.0% | Low base in prior period due to pandemic impact | - Gross profit increased by 30.6% from RMB 90.4 million in the prior period to RMB 118 million, with gross margin rising from 40.3% to 45.5%[21] - Profit after tax increased by 38.7% from RMB 49.6 million in the prior period to RMB 68.8 million, with the after-tax profit margin rising from 22.1% to 26.5%[28] Financial Position Analysis As of June 30, 2021, property, plant, and equipment increased to RMB 2.981 billion due to construction investments, while trade receivables and other payables also rose due to increased water sales and project-related payments - Property, plant, and equipment increased from RMB 2.545 billion at end-2020 to RMB 2.981 billion, primarily due to new construction-in-progress for Taizhou City Water Supply System (Phase III) and (Phase IV)[29] - Trade receivables increased from RMB 102 million at end-2020 to RMB 117 million, primarily due to increased water sales[28] - Other payables and accrued expenses increased from RMB 343 million at end-2020 to RMB 396 million, primarily due to increased payables related to Water Supply System (Phase III) and (Phase IV) construction[30] Liquidity and Financial Resources As of June 30, 2021, the Group held approximately RMB 344 million in cash, with total borrowings increasing to RMB 2.404 billion to fund construction, leading to a rise in the debt-to-equity ratio to 229.2% Cash and Borrowings (RMB) | Indicator | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and Bank Balances | Approx. RMB 344 million | Approx. RMB 230 million | | Total Borrowings | Approx. RMB 2,404 million | Approx. RMB 1,964 million | | Debt-to-Equity Ratio | 229.2% | 192.8% | - The increase in the debt-to-equity ratio is primarily due to new bank and other borrowings of approximately RMB 440 million for the construction of Taizhou City Water Supply System (Phase III) and (Phase IV)[30] Significant Investments, Acquisitions, and Dividend Policy The company made no significant investments during the period but pursued a strategic acquisition of 45% equity stakes in three water companies for RMB 171 million, while the Board decided not to declare an interim dividend - The Board did not recommend an interim dividend for the six months ended June 30, 2021[32] - The company agreed to acquire 45% equity stakes in Taizhou Tap Water and Jiaobei Water Supply for a total consideration of RMB 46.60 million, and a 45% equity stake in Luqiao Tap Water for RMB 124.42 million, with these acquisitions approved by the shareholders' meeting[32] Capital Structure and Risk Management The Group's RMB 2.404 billion bank borrowings are secured by trade receivables and future revenue rights, with primary operations in RMB and minor unhedged foreign exchange exposure from HKD-denominated IPO proceeds - The Group's bank borrowings of approximately RMB 2.404 billion are collateralized by trade receivables and future revenue rights from Water Supply Systems (Phase I to IV)[35] - The Group primarily operates in RMB, with foreign exchange risk mainly arising from HKD-denominated IPO proceeds, recording a net foreign exchange loss of approximately RMB 86,000 during the reporting period, with no hedging measures taken[35] Events After Reporting Period Post-reporting period, the company agreed to acquire a 9.375% equity stake in Taizhou Zhuxi Reservoir Development Co., Ltd. for RMB 75 million and proposed issuing foreign currency bonds not exceeding USD 200 million - On July 15, 2021, the company agreed to acquire a 9.375% equity stake in Taizhou Zhuxi Reservoir Development Co., Ltd. for RMB 75 million[36] - On August 25, 2021, the Board proposed issuing foreign currency bonds with a principal amount not exceeding USD 200 million[35] Employees and Remuneration Policy As of June 30, 2021, the Group employed 199 staff, with total employee benefits expenses of approximately RMB 31.6 million, operating under a fixed salary plus performance bonus system Employee Statistics and Welfare Expenses | Indicator | June 30, 2021 | June 30, 2020 | | :--- | :--- | :--- | | Number of Employees | 199 | 189 | | Employee Benefits Expenses (RMB) | Approx. RMB 31.6 million | Approx. RMB 26.4 million | Use of Net Proceeds from Initial Public Offering Of the HKD 167.5 million net IPO proceeds, approximately HKD 132.8 million has been utilized primarily for Water Supply System (Phase III) construction, with the remaining HKD 34.71 million planned for full use by end-2021 IPO Net Proceeds Utilization (HKD millions) | Purpose | Allocated Amount (HKD millions) | Utilized as of June 30, 2021 (HKD millions) | Unutilized Balance (HKD millions) | | :--- | :--- | :--- | :--- | | Construction of Water Supply System (Phase III) | 150.75 | 132.79 | 17.96 | | Working Capital and Others | 16.75 | 0 | 16.75 | | Total | 167.5 | 132.79 | 34.71 | Other Information This section covers corporate governance, compliance, and interests of directors, supervisors, and shareholders Corporate Governance and Compliance The company has consistently complied with the Corporate Governance Code and the Model Code for securities transactions by directors and supervisors since its listing - The company has consistently complied with the applicable provisions of the Corporate Governance Code during the reporting period[39] - All directors and supervisors have confirmed their continuous compliance with the Model Code during the reporting period[39] Directors, Supervisors, and Shareholder Interests As of June 30, 2021, Director Mr. Yang Yide held a 5.03% stake through controlled entities, while major shareholders include various local state-owned entities and Shanghai Industrial (Group) Co., Ltd. - Director Mr. Yang Yide held 10,058,338 domestic shares through controlled entities, representing 5.03% of the total issued shares[40][41] Major Shareholders (Partial) | Major Shareholder (Partial) | Nature of Holding | Share Class | Approximate Percentage of Total Issued Shares (%) | | :--- | :--- | :--- | :--- | | Taizhou State-owned Capital Operation Group Co., Ltd. | Controlled corporate interest | Domestic Shares | 21.63% | | Taizhou Huangyan District Finance Bureau | Controlled corporate interest | Domestic Shares | 13.34% | | Taizhou Jiaojiang District Finance Bureau | Controlled corporate interest | Domestic Shares | 11.11% | | Zhejiang International Trade Group Co., Ltd. | Controlled corporate interest | Domestic Shares | 10.06% | | Shanghai Industrial (Group) Co., Ltd. | Controlled corporate interest | H Shares | 6.25% | Interim Condensed Consolidated Financial Statements This section presents the company's interim financial statements, providing a comprehensive overview of its financial performance and position Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement details the company's operating results for H1 2021, showing revenue of RMB 260 million, gross profit of RMB 118 million, and a profit for the period of RMB 68.81 million, up 38.6% YoY Statement of Profit or Loss and Other Comprehensive Income (RMB thousands) | Item | 2021 H1 (RMB thousands) | 2020 H1 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 259,779 | 224,455 | | Cost of Sales | (141,683) | (134,085) | | Gross Profit | 118,096 | 90,370 | | Profit Before Tax | 92,749 | 67,242 | | Income Tax Expense | (23,942) | (17,601) | | Profit for the Period | 68,807 | 49,641 | Interim Condensed Consolidated Statement of Financial Position This statement reflects the company's financial position as of June 30, 2021, with total assets of RMB 4.069 billion, total liabilities of RMB 3.020 billion, and net assets of RMB 1.049 billion Statement of Financial Position (RMB thousands) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Non-Current Assets | 3,566,873 | 3,136,413 | | Of which: Property, Plant and Equipment | 2,981,050 | 2,545,168 | | Current Assets | 501,736 | 366,643 | | Total Assets | 4,068,609 | 3,503,056 | | Current Liabilities | 570,291 | 442,226 | | Non-Current Liabilities | 2,449,364 | 2,042,327 | | Of which: Interest-Bearing Bank and Other Borrowings | 2,372,480 | 1,963,807 | | Total Liabilities | 3,019,655 | 2,484,553 | | Total Equity | 1,048,954 | 1,018,503 | Interim Condensed Consolidated Statement of Changes in Equity This statement shows the change in shareholders' equity during H1 2021, with total equity increasing from RMB 1.019 billion to RMB 1.049 billion, driven by profit for the period offset by dividend payments - As of June 30, 2021, total equity increased from RMB 1.019 billion at the beginning of the period to RMB 1.049 billion[58] - The increase in equity was primarily driven by a profit for the period of RMB 68.81 million, partially offset by the declared final dividend of RMB 34 million for 2020[58] Interim Condensed Consolidated Statement of Cash Flows This statement summarizes cash flows for the period, with RMB 147 million net cash inflow from operating activities, RMB 424 million net cash outflow from investing activities, and RMB 391 million net cash inflow from financing activities, resulting in a RMB 113 million net increase in cash and cash equivalents Statement of Cash Flows (RMB thousands) | Item | 2021 H1 (RMB thousands) | 2020 H1 (RMB thousands) | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 146,728 | 48,110 | | Net Cash Flows Used in Investing Activities | (424,133) | (279,216) | | Net Cash Flows from Financing Activities | 390,896 | 321,545 | | Net Increase in Cash and Cash Equivalents | 113,491 | 90,439 | | Cash and Cash Equivalents at End of Period | 343,810 | 355,386 | Notes to the Interim Condensed Consolidated Financial Statements This section provides detailed explanations and supplementary information for the financial statement items, crucial for understanding the company's financial position and operating results Note 3 & 4: Operating Segments and Revenue Recognition The company operates a single reportable segment, water supply and pipeline installation, with all revenue and non-current assets located in mainland China, and notes a concentration of revenue from its top four customers - The Group has only one operating segment, water supply and installation of water pipelines, with all revenue derived from customers in mainland China[71][72] Revenue by Type (RMB thousands) | Revenue Type | 2021 H1 (RMB thousands) | 2020 H1 (RMB thousands) | | :--- | :--- | :--- | | Water Sales | 253,019 | 221,082 | | Installation Services | 6,760 | 3,373 | | Total | 259,779 | 224,455 | Note 8 & 9: Dividends and Earnings Per Share The Board did not declare an interim dividend for H1 2021, while basic and diluted earnings per share for the period were RMB 0.30, based on RMB 60.89 million profit attributable to owners of the parent company - The Board did not declare an interim dividend for the six months ended June 30, 2021[83] Earnings Per Share (RMB) | Indicator | 2021 H1 | 2020 H1 | | :--- | :--- | :--- | | Profit Attributable to Ordinary Equity Holders of the Parent Company (RMB thousands) | 60,892 | 43,582 | | Weighted Average Number of Ordinary Shares Issued | 200,000,000 | 200,000,000 | | Basic and Diluted Earnings Per Share (RMB) | 0.30 | 0.22 | Note 11 & 14: Receivables and Borrowings As of period-end, total trade receivables were RMB 117 million, mostly current and pledged for bank loans, while total interest-bearing bank and other borrowings amounted to RMB 2.404 billion, largely non-current and secured by various assets and guarantees - Trade receivables had a carrying amount of RMB 117 million, with 95.6% (RMB 110 million) aged within 3 months[88][90] - Total interest-bearing bank and other borrowings amounted to RMB 2.404 billion, of which RMB 2.372 billion were non-current liabilities[96] - The Group's bank and other borrowings are secured by trade receivables, future revenue rights from water supply systems, and guarantees from subsidiaries and shareholders[97][98][99] Note 16: Related Party Transactions During the reporting period, the company's primary related party transactions involved water sales totaling RMB 161 million, with trade receivables from related parties amounting to RMB 95.63 million at period-end - Water sales to related parties were the primary related party transaction during the reporting period, totaling RMB 161 million[102] Related Party Balances (RMB thousands) | Related Party Balance | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Amounts Due from Related Parties (Trade Nature) | 95,634 | 92,586 | | Amounts Due to Related Parties (Trade Nature) | 3,449 | 1,399 | Note 18: Events After Reporting Period This note reiterates post-reporting period events, including the approved acquisition of 45% equity stakes in three water companies and the agreement to acquire a 9.375% equity stake in Taizhou Zhuxi Reservoir Development Co., Ltd. for RMB 75 million - The resolution for the acquisition of partial equity stakes in Taizhou Tap Water, Jiaobei Water Supply, and Luqiao Tap Water was approved at the extraordinary general meeting on July 15, 2021[110] - On July 15, 2021, the company agreed to acquire a 9.375% equity stake in Zhuxi Reservoir Development for RMB 75 million[110]