Interim Results Announcement for the Six Months Ended 30 June 2021
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(a joint stock company incorporated in the People’s Republic of China with limited liability) (Stock code: 2281) INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2021 FINANCIAL HIGHLIGHTS For the six months ended 30 June 2021: • Revenue amounted to approximately RMB925.6 million, representing a decrease of approximately 20.9% from the same period of last year. • Profit for the period amounted to approximately RMB128.0 million, representing an increase of approximately 23.2% from the same period of last year. • Profit for the period attributable to owners of the Company amounted to approximately RMB118.0 million, representing an increase of approximately 21.8% from the same period of last year. • Basic earnings per share amounted to approximately RMB0.14, representing an increase of approximately 27.3% from the same period of last year. • The Board did not recommend the distribution of any interim dividend for the six months ended 30 June 2021. The board (the “Board”) of directors (the “Directors”) of Luzhou Xinglu Water (Group) Co., Ltd.* (the “Company” or “we”) is pleased to announce the unaudited condensed consolidated interim results and financial position of the Company and its subsidiaries (the “Group”) for the six months ended 30 June 2021 (the “Reporting Period”) together with comparative figures for the six months ended 30 June 2020 as follows: 1 UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2021 Six months ended 2021 2020 NOTES RMB’000 RMB’000 (unaudited) (unaudited) Revenue 3 Tap water supply 166,018 147,105 Wastewater treatment operating services 143,864 144,605 Interest income 55,739 38,030 Installation services 226,765 170,416 Construction and upgrade services of infrastructure 333,260 670,398 Total revenue 925,646 1,170,554 Cost of sales and services (677,094) (959,472) Gross profit 248,552 211,082 Other income, expenses, gains and losses, net 5 26,013 12,725 Impairment losses under expected credit loss model, net of reversal (7,741) (3,888) Distribution and selling expenses (10,317) (5,501) Administrative expenses (39,943) (32,220) Finance costs 6 (67,739) (53,039) Share of loss of an associate (35) (5) Loss on deemed disposal of interest in an associate (563) – Profit before tax 148,227 129,154 Income tax expense 7 (20,263) (25,288) Profit for the period 127,964 103,866 2 Six months ended 2021 2020 NOTES RMB’000 RMB’000 (unaudited) (unaudited) Other comprehensive income: Items that will not be reclassified to profit or loss: Fair value loss on investments in equity instruments at fair value through other comprehensive income (before tax) (768) (479) Deferred income tax on fair value loss on investments in equity instruments at fair value through other comprehensive income 192 120 Other comprehensive expense for the period, net of income tax (576) (359) Total comprehensive income for the period 127,388 103,507 Profit for the period attributable to: – Owners of the Company 117,952 96,875 – Non-controlling interests 10,012 6,991 127,964 103,866 Total comprehensive income for the period attributable to: – Owners of the Company 117,376 96,516 – Non-controlling interests 10,012 6,991 127,388 103,507 EARNINGS PER SHARE (RMB) 9 – Basic 0.14 0.11 3 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2021 As at As at 30 June 31 December 2021 2020 NOTES RMB’000 RMB’000 (unaudited) (audited) Non-Current Assets Property, plant and equipment 57,966 80,814 Right-of-use assets 82,480 83,717 Contract assets 257,377 210,881 Investment properties 13,868 14,323 Goodwill 25,278 25,278 Intangible assets 3,720,474 3,511,312 Equity instruments at fair value through other comprehensive income 1,086 1,854 Interest in an associate 54,004 54,602 Prepayments and other receivables 31,093 42,696 Receivables under service concession arrangements 1,642,644 1,629,149 Deferred tax assets 31,731 28,964 5,918,001 5,683,590 Current Assets Inventories 33,539 33,825 Receivables under service concession arrangements 31,259 30,147 Trade receivables 10 459,228 353,667 Prepayments and other receivables 71,221 53,926 Prepaid income tax 17,370 14,132 Contract assets 24,135 18,531 Bank balances and cash 1,035,310 1,036,193 1,672,062 1,540,421 4 As at As at 30 June 31 December 2021 2020 NOTES RMB’000 RMB’000 (unaudited) (audited) Current Liabilities Trade payables 11 79,145 58,988 Other payables 1,070,394 1,126,272 Tax liabilities 6,010 4,145 Borrowings 459,443 509,744 Lease liabilities 128 128 Provisions 13,868 13,253 Contract liabilities 345,468 277,693 Deferred income – government grants 14,554 13,768 Bonds payable 499,273 – 2,488,283 2,003,991 Net Current Liabilities (816,221) (463,570) Total Assets Less Current Liabilities 5,101,780 5,220,020 Capital and Reserves Share capital 859,710 859,710 Reserves 1,383,356 1,316,927 Equity attributable to owners of the Company 2,243,066 2,176,637 Non-controlling interests 181,671 156,295 Total Equity 2,424,737 2,332,932 Non-Current Liabilities Deferred tax liabilities 20,466 20,749 Borrowings 1,794,699 1,531,824 Lease liabilities 199 199 Provisions 384,998 355,073 Deferred income – government grants 277,346 281,717 Bonds payable 199,335 697,526 2,677,043 2,887,088 5,101,780 5,220,020 5 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2021 1. BASIS OF PREPARATION The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting issued by the International Accounting Standards Board (the “IASB”) as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The Group had net current liabilities of RMB816,221,000 as at 30 June 2021. In the opinion of the Directors, the condensed consolidated financial statements of the Group have been prepared on a going concern basis because the Group will be able to meet in full its financial obligations as and when they fall due for the foreseeable future, taking into account the expected cash flows from operations and the banking facilities available to the Group as at 30 June 2021. The directors believe the existing bank borrowings included in current liabilities at the end of the reporting period could be successfully renewed on maturity date based on prior experiences. As at 30 June 2021, the Group had available unutilised bank loan facilities of RMB1,177,000,000. 2. PRINCIPAL ACCOUNTING POLICIES The condensed consolidated financial statements have been prepared on the historical cost basis except for equity instruments at fair value through other comprehensive income, which are measured at fair values. The accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2021 are the same as those presented in the Group’s annual consolidated financial statements for the year ended 31 December 2020. Application of amendments to IFRSs In the current interim period, the Group has applied the Amendments to References to the Conceptual Framework in IFRS Standards and the following amendments to IFRSs issued by the IASB, for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2021 for the preparation of the Group’s condensed consolidated financial statements. Amendment to IFRS 16 Covid-19-Related Rent Concessions Amendments to IFRS 9, IAS 39, IFRS 7, Interest Rate Benchmark Reform – Phase 2 IFRS 4 and IFRS 16 The application of the amendments to IFRSs in the current period has had no material impact on the Group’s financial positions and performance for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements. 6 3. REVENUE Disaggregation of revenue from contracts with customers Six months ended 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) Type of services Tap water supply – Tap water 166,018 147,105 – Installation services 226,765 170,416 – Construction and upgrade services of tap water supply infrastructure 183,990 352,335 576,773 669,856 Wastewater treatment – Operating services 143,864 144,605 – Construction and upgrade services of wastewater treatment infrastructure 149,270 318,063 293,134 462,668 Revenue from contracts with customers 869,907 1,132,524 Wastewater treatment – Interest income 55,739 38,030 Revenue 925,646 1,170,554 Timing of revenue recognition At a point in time 309,882 291,710 Over time 560,025 840,814 869,907 1,132,524 Type of customer Government 482,905 826,270 Non-government 387,002 306,254 869,907 1,132,524 The Group’s above revenue are derived in the PRC. The reconciliation of the revenue from contracts with customers with the segment revenue is disclosed in note 4. 7 4. SEGMENT INFORMATION Information reported to Chairman of the Company, being the chief operating decision maker (“CODM”), during the period, for the purposes of resource allocation and assessment of segment performance focuses on types of services provided.