Excluding One-Off Gains, Net Profit increased 22.3% Y-O-Y
Interim Dividend of HK$15 Cents Per Share with an Increase of 7.1% for 1HFY2020/21
* Excluding the effect of one-off gain of HK$214.8 million from the acquisition of Kangda International last year and a negative gain ofHK$40.3 million this year
(26 November 2020, Hong Kong) China Water Affairs Group Limited(“China Water Affairs” or the “Company”, stock code: 00855.HK), a professional and market-oriented leader of integrated water operation in China, announced today its interim results of the Company and its subsidiaries (the “Group”) for the six months ended 30 September 2020 (the “Reporting Period” or the “Period”).
In the first half of 2020, the ongoing COVID-19 pandemic continued to deal a blow to every industry. However, as one of the advantages of the Group's public utilities business nature, the stability of cash flow was prominent. During the Reporting Period, the Group recorded a revenue of HK$5.13 billion, representing an increase of 17.8% Y-O-Y. Operating profit was approximately HK$1.83 billion, with an increase of 14.0% Y-O-Y. Net profit during the Period recorded approximately HK$1.27 billion, slightly dropped by 1.3% Y-O-Y, this mainly attributable to the one-off contribution of HK$214.8 million arising from the acquisition of interests in Kangda International for the corresponding period last year and a negative of HK$40.3 million one-off gain within the period. Excluding such effect, adjusted net profit in the Period rose 22.3% Y-O-Y, and the adjusted profit attributable to shareholders rose 30.1% Y-O-Y.
As the core business of the Group, City water supply operation and construction segment achieved strong growth recorded a revenue of approximately HK$4.24 billion during the Reporting Period, with an increase of 18.1% Y-O-Y. The city water supply segment recorded profit of about HK$1.63 billion, with an increase of 12.2% Y-O-Y. With further implementation of the strategy of organic growth of existing water supply business and new acquisition development, the Group performed well in terms of water treatment capacity and actual water supply. For example, water supply increased by more than 11% Y-O-Y within the Period. Meanwhile, benefiting from the continuous implementation of the Group’s integrated urban and rural water supply strategy, the revenue of water supply connection business of the Period increased by more than 20% Y-O-Y. Subject to the epidemic situation being under control and the resumption of production and work in the mainland, the income of the city water supply operation and construction segment accounted for 82.6% for the total income.
In terms of value-added services, the Group's direct drinking water business has achieved rapid growth. During the period, the Group recorded 158 new direct drinking water projects which amounted to a revenue of HK$51.69 million. As of September 2020, the Group’s direct drinking water service has covered a population of nearly 850,000 and it is expected to be rolled out to other cities of the Group soon. At the same time, the Group vigorously promotes Fingertip Water APP in the terminal application of Smart Water. During the epidemic period, the informatization and automation system set up by the Group have played an important role in ensuring the safe production of water supply. At present, Fingertip Water APP service has 23 added cities, cumulatively covered 36 pilot cities and serves nearly 400,000 users. It is expected that the promotion of Fingertip Water application will be accelerated.
The Group focuses on the investment of management and financial resources in the core water supply business segment in order to concentrates on the comprehensive and steady promotion and high-quality development of the water supply business, which constantly improves the Group’s core competitiveness. As for sewage treatment and drainage operation services, due to the fact that the upgrading of sewage treatment water plant was basically completed last year, the revenue from environmental protection segment amounted to HK$500.2 million, representing a decrease of 15.4% as compared with the last corresponding period.
In addition, the Group completed the sale of several non-core assets during the period, including projects such as Luyi Real Property and Xiannv Lake Asset, for a total asset disposal income of approximately HK$296 million. The cash allocation will provide resources for the development of the Group's core business.
The Group has always attached great importance to the overall interests of shareholders and is committed to strive to bring rich returns for shareholders. During the period, the Board of Directors has resolved to declare an interim dividend of HK$0.15 per share for the six months ended 30 September 2020 (For the same period last year: HK$0.14 per share) in order to return the shareholders for their long-term support to the Group.
On the stable advantages of utility revenue and stable cash flows, the Group relies actively maintain the steady development of business and committed to strengthen cash flow management. As of 30 September 2020, the Group’s available cash are amounted to approximately HK$6.09 billion. The total assets of the Group are approximately HK$44.76 billion. For the period under review, the total gearing ratio and current ratio were 66.4% and 1.06 times respectively, both maintained at the healthy and controllable level.
Looking forward, China Water Affairs will adhere to the development strategy with water supply as the core and accelerate the process of “urban and rural water supply integration” and “supply and drainage integration”. The Group is actively maintaining its growth momentum based on a sound financial foundation and continue to improve and strengthen the level of service. The Group will reinforce and develop the construction of smart water system and enhance the core competitiveness of the enterprise. While providing better service to the society, the Group will continue to create more value for the shareholders.
About China Water Affairs Group Limited
A leading market-oriented, professional, international, and cross region water supply operator in China and the only Hong Kong listed water company focusing on tap water. Headquartered in Hong Kong. Operation management centers in Beijing and Shenzhen. The main business of the Group (including associated companies) is to operate urban water supply, sewage treatment and drainage and other related value-added services in the Mainland of China. Covering around 30 million people in over 100 cities in 20 provinces and 3 municipal cities. Total daily capacity: over 20 million m³, and the Group has established a leading position in the overall business operation mode in China’s water affairs market. Management comprises of veteran experts in the water industry with insight into government policies. Included in the first batch of Shenzhen-Hong Kong Stock Connect by HKEX in 2016. Included in the FTSE Environmental Opportunities Asia Pacific Index since 2009.
This press release is issued by PRChina Limited on behalf of China Water Affairs Group Limited.
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