Annual Report 2011

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Annual Report 2011 Contents Contents 2 Corporate Information 3 Group Structure 4 Chairman’s Statement 7 Management Discussion and Analysis 19 Corporate Governance Report 24 Directors and Senior Management 29 Report of the Directors 43 Independent Auditors’ Report 45 Consolidated Income Statement 46 Consolidated Statement of Comprehensive Income 47 Consolidated Statement of Financial Position 49 Consolidated Statement of Changes in Equity 51 Consolidated Statement of Cash Flows 53 Statement of Financial Position 54 Notes to Financial Statements 171 Five Year Financial Summary Corporate Information Annual Report 2011 CORPORATE INFORMATION BOARD OF DIRECTORS REGISTERED OFFICE Executive Directors Canon’s Court 22 Victoria Street Mr. Zhang Honghai (Chairman) Hamilton HM 12 Mr. E Meng Bermuda Mr. Jiang Xinhao Mr. Hu Xiaoyong (Chief Executive Officer) HEAD OFFICE AND PRINCIPAL Mr. Zhou Min PLACE OF BUSINESS Mr. Li Haifeng Mr. Zhang Tiefu 66th Floor Mr. Hou Feng Central Plaza Ms. Qi Xiaohong 18 Harbour Road Mr. Ke Jian Wanchai Mr. Tung Woon Cheung Eric Hong Kong Tel: (852) 2796 9963 Independent Non-executive Directors Fax: (852) 2796 9972 Mr. Shea Chun Lok Quadrant PRINCIPAL SHARE REGISTRAR Mr. Zhang Gaobo AND TRANSFER AGENT Mr. Guo Rui Ms. Hang Shijun Butterfield Fulcrum Group (Bermuda) Limited Mr. Wang Kaijun Rosebank Centre 11 Bermudiana Road AUDIT COMMITTEE Pembroke HM08 Bermuda Mr. Shea Chun Lok Quadrant (Chairman) Mr. Guo Rui HONG KONG SHARE Mr. Zhang Gaobo REGISTRAR AND TRANSFER OFFICE NOMINATION COMMITTEE Tricor Tengis Limited Mr. Zhang Honghai (Chairman) 26/F., Tesbury Centre Mr. Zhang Gaobo 28 Queen’s Road East Mr. Guo Rui Wanchai REMUNERATION COMMITTEE Hong Kong Mr. Zhang Gaobo (Chairman) AUDITORS Mr. Guo Rui Ernst & Young Ms. Qi Xiaohong PRINCIPAL BANKERS COMPANY SECRETARY In Hong Kong: Mr. Tung Woon Cheung Eric Agricultural Bank of China Ltd., Hong Kong Branch China Development Bank Corporation Hong Kong Branch STOCK CODE DBS Bank Ltd., Hong Kong Branch 371 Mizuho Corporate Bank Ltd., Hong Kong Branch Standard Chartered Bank (Hong Kong) Ltd WEBSITE In Mainland China: www.bewg.com.hk Bank of Beijing Bank of China The Industrial and Commercial Bank of China China Construction Bank 002 Beijing Enterprises Water Group Limited Group Structure As at 31 December 2011 Annual Report 2011 GROUP STRUCTURE As at 31 December 2011 Beijing Enterprises Holdings Limited# (stock code: 392) 44.11% Beijing Enterprises Water Group Limited# (stock code: 371) 100% BEWG Environmental Group Co., Ltd. (北控中科成環保集團有限公司) (a sino-foreign joint venture established in the People’s Republic of China) Eastern China Shandong Southern China Western China Northern China Overseas 100% 100% 100% 100% 50% Taizhou Jiaonan Zhongye Mianyang Malaysia: (「台州」) (「膠南」) (「中業」) (「綿陽」) Loyal BEWG 90% 100% 100% 100% 100% Huang Yan Heze Nansha Jiangyou BEWG (M) (「黃岩」) (「菏澤」) (「南沙」) (「江油」) 100% 100% 100% 100% Tongling Qingdao Changsha Huayang (「銅陵」) (「青島」) (「長沙」) (「華陽」) 100% 100% 100% 100% Xu Zhou Shangma Sanshui Shuangliu (「徐州」) (「上馬」) (「三水」) (「雙流」) 100% 92.71% 100% 100% Xiangshui Zhanhua Shenzhen Longquan (「響水」) (「沾化」) Feng Tai (「龍泉」) 100% (「深圳豐泰」) Fu Ning 100% 100% Jinan Shifang 100% Pengzhou (「阜寧」) (「濟南十方」) Lei Yang (「彭州」) 100% Zongyang 83.8% (「耒陽」) 100% Binzhou Mianyang (「樅陽」) 100% (「濱州」) Shenzhen Nong Ke Qu 100% Chuang Xin (「綿陽農科區」) Huaining (「深圳創新」) (「懷寧」) 100% 100% Qingbaijiang 100% Quanzhou (「青白江」) Qianshan (「泉州」) (「潛山」) 50% San Chahu 100% Yatong Taizhou (「三岔湖」) (「亞同泰州」) 100% Wulumuqi Jiangsu Huitong 100% (「烏魯木齊」) (「江蘇滙同」) 100% 100% Hu Tu Bi Yatong (Anqing) (「呼圖壁」) (「亞同(安慶)」) 100% Binhai (「濱海」) 100% 30.77% 49.23% 100% Yongzhou Guigang Weifang (「永州」) (「貴港」) (「濰坊」) 100% 28.84% 46.16% 100% 100% Hainan Hezhou Jiaozhou Qi Qi Har (「海南」) (「賀州」) (「膠州」) (「齊齊哈爾」) 100% 60% 100% Fuzhou Guiyang Changping (「福州」) Qingzhen (「昌平」) 100% (「貴陽清鎮」) Yueyang 80% 97% Jinzhou (「岳陽」) Guangan (「錦州」) (「廣安」) 60% 50% Dalian Yunnan (「大連」) (「雲南」) 60% 50% Caofeidian Kunming (「曹妃甸」) Konggang 100% (「昆明空港」) Beizhen 70% (「北鎮」) Gatewin Taifu (「捷運泰富」) Linghai 100% 70% (「凌海」) Gatewin Luqiao (「捷運路橋」) Yixian 100% 70% Yuxi Gatewin (「義縣」) (「玉溪捷運」) Goubangzi 100% 50% Yuxi (「溝幫子」) (「玉溪」) 65% Yibin (「宜賓」) 89% Zun Yi (「遵義」) 45% Gui Yang (「貴陽」) # Listed on the Main Board of The Stock Exchange of Hong Kong Limited Beijing Enterprises Water Group Limited 003 Chairman’s Statement Annual Report 2011 CHAIRMAN’S STATEMENT Dear Shareholders, In 2011, European debt crisis are spreading along with the continuous downturn in global economy, on the other hand, the Chinese government continued to implement its macroeconomic austerity control and tighten its financial monetary policies. Under these backgrounds, Beijing Enterprises Water Group Limited (the “Company” and the subsidiaries, collectively referred to as the “Group”) persists in adhering closely to its development strategy and annual operation targets. Relying on the solid development foundation and resources advantages, the Group not only achieved a rapid expansion of its core business but also made successive breakthroughs in its segments business investment. Owing to a more rational business operation chain structure and distribution of its operating units, the Group’s business will maintain a steady growth pace. As a water supply-based utility company of Hang Seng Composite Index, Hang Seng Composite Industry Index-Utilities and Hang Seng Composite Medium-sized Stock Market Value Index, the Group was awarded the honorable title of being “China’s Renowned Water Enterprise” and ranked the first in the “2011 Top Ten Influential Enterprises in the Water Industry in China” in 2011. BUSINESS REVIEW The revenue of the Group for the year ended 31 December 2011 was HK$2,654,454,000. During the year, profit attributable to shareholders of the Company was HK$600,736,000 with basic earnings per share of HK8.94 cents. With respect to traditional business, as of 31 December 2011, the Group secured an additional increase in water processing capacity of 2,819,450 tons per day. The Group’s business regions had expanded to 18 provinces with its industry position and brand influence significantly improved. With respect to international business, the Group successfully awarded a construction project in Malaysia. On 3 November 2011, the Group signed an agreement with the Malaysian Government to construct the Pantai 2 underground sewage treatment plant with a capacity of 320,000 tons per day. The seawater desalination project of the Group was awarded as “a demonstrative project for seawater desalination industry development of National Development and Reform Commission” by the National Development and Reform Commission and was formally completed in October 2011. Meanwhile, with respect to introducing seawater desalination projects in Beijing, the preliminary expert study and evaluation and other commercial and technical preparation works for the seawater desalination plant was initially completed. In 2011, the Group obtained an equity financing of HK$3,385,362,000 and debt financing of HK$6,413,646,000 in aggregate. The Group is making significant breakthroughs in its financing activities. 004 Beijing Enterprises Water Group Limited Annual Report 2011 CHAIRMAN’S STATEMENT MANAGEMENT CONTROL OF THE GROUP The Group persists to tune and optimise its operational model as well as management control model. In optimising its management control system, the Company strengthens its financial management and risk management control by means of stressing on centralised decision-making as well as coordinating resources and risks control. Especially, we emphasis on system optimisation and refine each responsibility for better management. In addition to risk prevention, the Group always strive for improving economic benefits at the same time. The Group strengthened its personnel training and technology research and development, worked closely with the strategic platform of Tsinghua University-BE Water Group Environmental Industry Joint Research Institute to build a management team that possesses entrepreneur capabilities. The Group had obtained, applied for and participated in the research on issues at national and provincial level under The Ministry of Housing and Urban-Rural Development of the People’s Republic of China, The Ministry of Science and Technology of the People’s Republic of China and Beijing Municipal Science & Technology Commission. DEVELOPMENT STRATEGY In 2012, the Group will establish a performance-oriented operation and management mechanism. We further expand, enhance and optimise the traditional water business as well as promote seawater desalination business proactively. Apart from the stably expansion of international business, we accelerate the sludge treatment business, and stably and prudently carry out the comprehensive water environmental renovation business. The Group will not only improve the utilisation efficiency of capital and enhance income level, but also strengthen the coordination of the Group’s professional resources under the implementation of talent thriving enterprises strategy. We strengthen our research and development technologies so as to create the core enterprises competitiveness. The Group focus on the building of its corporate culture and increases its corporate convergence force. FUTURE OUTLOOK The sustainable and favorable policy of the Chinese government for the industry, together with the expanding overall demand for environmental protection and water supply market shall contribute to the faster overall development pace over the industry compared to the overall
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