Annual Report 2019

台州市水務集團股份有限公司 Taizhou Water Group Co., Ltd.* (a joint stock company incorporated in the People’s Republic of China with limited liability) Stock code : 1542 ANNUAL REPORT 2019 * For identification purposes only CONTENT Corporate Information 2 Definitions 4 Financial Highlights 7 Chairman’s Statement 8 Management Discussion and Analysis 10 Biographies of Directors, Supervisors and Senior Management 18 Report of Directors 27 Report of the Supervisory Committee 45 Corporate Governance Report 47 Independent Auditor’s Report 59 Consolidated Statement of Profit or Loss and Other Comprehensive Income 64 Consolidated Statement of Financial Position 65 Consolidated Statement of Changes in Equity 67 Consolidated Statement of Cash Flows 68 Notes to Financial Statements 70 Four-Year Financial Summary 128 2 Taizhou Water Group Co., Ltd. // Annual Report 2019 CORPORATE INFORMATION BOARD OF DIRECTORS AUDIT COMMITTEE Executive Directors Mr. Li Wai Chung (Chairman) Mr. Yan Chuanhua (Note) (Chairman of the Board) Mr. Wang Haiping Mr. Zhang Junzhou Ms. Hou Meiwen Non-executive Directors STRATEGY COMMITTEE Mr. Wang Haibo Mr. Yan Chuanhua (Chairman) Mr. Wang Haiping Mr. Zhang Junzhou Ms. Fang Ya Mr. Wang Haibo Mr. Yu Yangbin Ms. Fang Ya Ms. Huang Yuyan Ms. Huang Yuyan Mr. Yang Yide Mr. Zheng Jianzhuang Mr. Guo Dingwen Mr. Ye Jianhua (resigned on 10 March 2020) Mr. Ye Jianhua (resigned on 10 March 2020) JOINT COMPANY SECRETARIES Independent Non-Executive Directors Ms. Chen Liying Mr. Zheng Jianzhuang Ms. Siu Pui Wah Ms. Lin Suyan Ms. Hou Meiwen AUTHORISED REPRESENTATIVES Mr. Li Wai Chung Mr. Yan Chuanhua Mr. Wang Yongyue Ms. Siu Pui Wah REMUNERATION COMMITTEE REGISTERED OFFICE AND PRINCIPAL Mr. Wang Yongyue (Chairman) PLACE OF BUSINESS IN CHINA Mr. Yan Chuanhua No. 308 Yin Quan Road Mr. Zhang Junzhou Xicheng Street Mr. Zheng Jianzhuang Huangyan District Ms. Lin Suyan Taizhou, Zhejiang Province NOMINATION COMMITTEE PRC Mr. Yan Chuanhua (Chairman) PRINCIPAL PLACE OF BUSINESS IN Mr. Yu Yangbin HONG KONG Mr. Yang Yide 14/F., Golden Centre Mr. Zheng Jianzhuang 188 Des Voeux Road Central Ms. Lin Suyan Hong Kong Ms. Hou Meiwen Mr. Wang Yongyue Note: Mr. Yan Chuanhua tendered resignation as our executive Director on 19 March 2020 and the resignation will be effective from the conclusion of the AGM. Annual Report 2019 // Taizhou Water Group Co., Ltd. 3 Corporate Information H SHARE REGISTRAR PRINCIPAL BANKERS Computershare Hong Kong Investor Services Limited Agricultural Bank of China, Taizhou Branch Shops 1712-1716 China Bank of Construction, Taizhou Huangyan Branch 17th Floor, Hopewell Centre Industrial and Commercial Bank of China, 183 Queen’s Road East Taizhou Huangyan Branch Wan Chai Bank of China, Taizhou Luqiao District Branch Hong Kong Taizhou Bank LEGAL ADVISER AUDITOR As to Hong Kong law Ernst & Young Jingtian & Gongcheng LLP Certified Public Accountants Suites 3203-3207 22/F, CITIC Tower 32/F, Edinburgh Tower 1 Tim Mei Avenue The Landmark Central 15 Queen’s Road Central Hong Kong Hong Kong STOCK CODE As to PRC law 1542 Tian Yuan Law Firm 10/F, China Pacific Insurance Plaza B COMPANY WEBSITE No. 28 Fengsheng Lane www.zjtzwater.com Xicheng District Beijing 100032 PRC COMPLIANCE ADVISER Sinolink Securities (Hong Kong) Company Limited Units 2505-06, 25/F Low Block, Grand Millennium Plaza 181 Queen’s Road Central Hong Kong 4 Taizhou Water Group Co., Ltd. // Annual Report 2019 DEFINITIONS In this annual report, unless the context otherwise requires, the following expressions shall have the following meanings: “AGM” or “Annual General Meeting” the annual general meeting of the Company for the year ended 31 December 2019 to be convened and held on Friday, 5 June 2020, or any adjournment thereof “Articles of Association” the articles of association of the Company, as amended from time to time “associate(s)” has the meaning ascribed to it under the Listing Rules “Audit Committee” the audit committee of the Board “Binhai Water” Taizhou Binhai Water Co., Ltd.* (台州市濱海水務有限公司), a limited liability company established in the PRC on 7 June 2016 “Board” or “Board of Directors” the board of Directors of the Company “Chairman” the chairman of the Board “China” or “PRC” the People’s Republic of China, but for the purpose of this annual report and for geographical reference only and except where the context otherwise requires, references in this annual report to “China” and the “PRC” do not apply to Taiwan, Macau Special Administrative Region and Hong Kong “Company” Taizhou Water Group Co., Ltd.* (台州市水務集團股份有限公司), a joint stock company established in the PRC with limited liability, the H Shares of which are listed on the Main Board of the Stock Exchange (stock code: 1542) “Company Law” Company Law of the People’s Republic of China (中華人民共和國公司法), as promulgated by the Standing Committee of the Eighth National People’s Congress on 29 December 1993 and effective on 1 July 1994, as amended, supplemented or otherwise modified from time to time “connected person(s)” has the meaning ascribed to it under the Listing Rules “controlling shareholder(s)” has the meaning ascribed to it under the Listing Rules “Corporate Governance Code” the Corporate Governance Code and Corporate Governance Report, as set out in Appendix 14 to the Listing Rules “Director(s)” the director(s) of the Company “Domestic Share(s)” issued ordinary share(s) in the share capital of the Company with a nominal value of RMB1.00 each, which are subscribed for and paid up in RMB Annual Report 2019 // Taizhou Water Group Co., Ltd. 5 Definitions “Group”, “we” or “our” the Company and its subsidiaries “H Share(s)” overseas listed foreign share(s) in the share capital of the Company with a nominal value of RMB1.00 each, which are listed on the Main Board of the Stock Exchange and traded in HKD “HKD” or “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” or “HK” the Hong Kong Special Administrative Region of the PRC “Initial Public Offering” the successful initial public offering of the Company’s H Shares through the Stock Exchange on 31 December 2019 “Listing Date” 31 December 2019, being the date on which the H Shares of the Company were listed and from which dealings commenced on the Stock Exchange “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time “Model Code” the Model Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix 10 to the Listing Rules “Nomination Committee” the nomination committee of the Board “Prospectus” the prospectus of the Company dated 17 December 2019, issued in relation to the Initial Public Offering and the listing of H Shares on the Stock Exchange “Remuneration Committee” the remuneration committee of the Board “Reporting Period” the 12-month period from 1 January 2019 to 31 December 2019 “RMB” Renminbi, the lawful currency of the PRC “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “Share(s)” the Domestic Share(s) and/or the H Share(s) “Shareholder(s)” holder(s) of the Share(s) 6 Taizhou Water Group Co., Ltd. // Annual Report 2019 Definitions “Stock Exchange” The Stock Exchange of Hong Kong Limited “Strategy Committee” the strategy committee of the Board “subsidiary/(ies)” has the meaning ascribed to it under the Listing Rules “Supervisor(s)” member(s) of the Supervisory Committee “Supervisory Committee” the supervisory committee of the Company “Taizhou Luqiao Water Supply” Taizhou Luqiao Water Supply Co., Ltd.* (台州市路橋自來水有限公司), a limited liability company established in the PRC on 7 March 2000 “Taizhou South Bay Water Supply” Taizhou South Bay Water Supply Co., Ltd.* (台州市南部灣區水務有限公司), a limited liability company established in the PRC on 13 March 2018 and a 60%-owned subsidiary of our Company as at the date of this annual report “Wenling Water Supply” Wenling Water Supply Co., Ltd.* (溫嶺市供水有限公司), a limited liability company established in the PRC on 20 November 2007 “Yuhuan Water Supply” Yuhuan Water Supply Co., Ltd.* (玉環市自來水有限公司), a limited liability company established in the PRC on 12 May 1992 “Zhejiang Huangyan Water Supply” Zhejiang Huangyan Water Supply Co., Ltd.* (浙江黃岩自來水公司), a limited liability company established in the PRC on 1 January 1989 “%” per cent * For identification purposes only Annual Report 2019 // Taizhou Water Group Co., Ltd. 7 FINANCIAL HIGHLIGHTS As a listed company of integrated water supply, the Company has both the goals of profitability and public welfare. For the profitability, growth and the Group’s management ability of the operations cared by the investors, the Group focuses on selecting indicators related to profitability in the financial review such as revenue, cost, expenses, gross profit and gross profit margin, profit after tax and profit margin, etc., in order to analyse the profitability and future trends so that the investors can better understand profitability and growth. The Group has chosen to make analysis and explanation of major assets and major current accounts, so that investors and stakeholders can better understand the Group’s financial position and management’s operation capabilities. RESULTS Year ended 31 December 2019 2018 RMB’000 RMB’000 CONTINUED OPERATIONS Revenue 472,148 504,263 Profit before tax from Continued Operations 140,479 160,787 Income tax expense 35,958 40,537 Profit for the year from Continued Operations 104,521 120,250 Profit for the year from Discontinued Operations – 3,248 Profit and other comprehensive income for the year 104,521 123,498 Attributable to: Owners of the Company 92,540 110,450 Non-controlling interests 11,981 13,048 104,521 123,498 Basic earnings per share(Note) (RMB) 0.62 0.74 Dividend per share (RMB) 0.16 – Note: The calculation of the basic earnings per share amounts is based on the profit for the year for the Group attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares in issue during the year.

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