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China Water Affairs Announces FY2020/21 Annual Results

Core Water Supply Boosted
with Adjusted Profit Attributable to Shareholders* Up 21.6%
Results Highlights
(HK$ million)
 For the 12 months ended 31 March
Gross Profit
Operating Profit
Adjusted Net Profit* 
Adjusted Profit Attributable to Shareholders* 
Adjusted Basic Earnings per Share (HK cents)* 
Dividend per Share (HK cents)
(29 June 2021, Hong Kong) China Water Affairs Group Limited (“China Water Affairs” or the “Company”, stock code: 00855.HK), a leader of integrated water operation in China, announced today its annual results of the Company and its subsidiaries (the “Group”) for the twelve months ended 31 March 2021 (the “Reporting Period” or the “Period”).
During the Reporting Period, facing the unexpected outbreak of COVID-19 and the impact of the global economic downturn on every industry in Mainland China, the advantages of the Group’s public utilities business shined and our overall business had shown resilience and recorded total revenue of approximately HK$10.346 billion, representing a strong growth of 19.0% as compared with the last corresponding year. Excluding the effect of the one-off gains, profit attributable to shareholders for the Period increased significantly by 21.6% to approximately HK$1.732 billion. Adjusted basic earnings per share for the Period grew by 22.5% from last year to HK$1.09, excluding the effect of the one-off gains.
Robust growth has been recorded in the city water supply operation and construction segment with a revenue of approximately HK$8.54 billion during the Period, featuring a rapid and balanced growth of 18.3% Y-O-Y. Representing 82.6% of the Group’s total revenue, the segment continued to be the Group's largest revenue contributor and delivered over HK$3.39 billion profit with an increase of 14.8% Y-O-Y. Revenue from water supply operation services and water supply connection income increased by 17.7% to approximately HK$4.73 billion. Revenue from water supply construction services increased by 19.6% to HK$3.69 billion.
Environmental protection segment recorded a revenue of approximately HK$1.21 billion, with an increase of 12.2% Y-O-Y, accounting for 11.6% of the total revenue. Profit of the environmental protection segment increased by 6.4% to around HK$294 million, as compared with the last corresponding year. Driven by the Group's supply-drainage integration strategy, revenue from sewage treatment and water environmental renovation construction services reached HK$747 million, representing a significant increase of 21.7% as compared with the last corresponding year.
The Group has also achieved an excellent performance in providing value-added services. As of 31 March 2021, the Group has a total of 961 direct drinking water projects serving a population of over one million with 232 new projects added during the Period, contributing to a revenue of approximately HK$140 million, surging over 54% compared with the last corresponding year. At the same time, the Group has expedited the promotion of “Fingertip Water” APP and smart water service. The population covered jumped rapidly to over 880,000 households from 400,000 last year.
The Group has maintained its financial strength and long-term business strategy. As at 31 March 2021, the Group recorded 12.3% increase in total assets to approximately HK$47.04 billion and 20.2% increase in total equity to approximately HK$16.95 billion. The Adjusted EBITDA* to finance cost coverage ratio rose by 35.2% to 12.7 times from 9.4 times last year. Total gearing ratio remains at a healthy and manageable level of 64% at the end of the period, down by 2.4 percentage points from last year.
In consideration of the satisfactory results and to reward the shareholders’ long-term support to the Group, the board of directors has proposed to pay the equity shareholders of the Company a final dividend of HK 16 cents per share. Together with the interim dividend of HK 15 cents per share, the total dividends for the year would amount to HK 31 cents per share, representing an increase of 3.3% from last year with a dividend payout ratio of around 30%.
Recently, the National Development and Reform Commission (NDRC) has issued a series of documents that set out requirements for the further opening up of infrastructure markets and the establishment as well as optimization of formation of urban and rural water supply tariff and adjustment mechanism during the 14th Five-Year Period. The implementation of the plan will accelerate the reform and marketization of the water industry and create larger space for the expansion of market.
Looking ahead, the Group will seize market opportunities and continue to maintain its two core development strategies, namely urban-rural water supply integration and supply-drainage integration, and relentlessly develop its core water supply businesses to achieve scale economy. While speeding up merger and acquisition efforts, the Group will intensify and develop the business expansion model of cooperation with local governments. the Group will leverage its long-term water supply platform, capable service team and extensive customer base to actively promote direct drinking water business to meet the demand for healthy drinking water of higher quality. The Group will also establish new business and profit growth points as well as improve and optimize the Group’s business deployment and industry value chain to enhance synergies, enabling the Group to create higher returns for shareholders and contribute to national economic development and improvement of people’s livelihood.

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