First Quarterly Report 第一季度業績報告€¦ · Finance costs (670) (1,055) LOSS BEFORE TAX...

First Quarterly Report第一季度業績報告

CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher

investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be

aware of the potential risks of investing in such companies and should make the decision to invest only after due and

careful consideration.

Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities

traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no

assurance is given that there will be a liquid market in the securities traded on GEM.

Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this report, make no

representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising

from or in reliance upon the whole or any part of the contents of this report.

This report, for which the directors (the “Directors”) of Great Water Holdings Limited (the “Company”) collectively and individually

accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the GEM of

the Stock Exchange (the “GEM Listing Rules”) for the purpose of giving information with regard to the Company. The Directors,

having made all reasonable enquiries, confirm that, to the best of their knowledge and belief the information contained in this

report is accurate and complete in all material respects and not misleading or deceptive; there are no other matters the omission of

which would make any statement herein or this report misleading.

This First Quarterly report is printed on environmentally friendly paper

2 Great Water Holdings Limited

FINANCIAL HIGHLIGHTSFor the three months ended 31 March 2020

• BasedontheunauditedcondensedconsolidatedresultsoftheGroupforthethreemonthsended31March2020(the

“Period”), theGroup’srevenueforthePeriodincreasedtoapproximatelyRMB18,739,000,representinganincreaseof

approximately313.5%ascomparedtoapproximatelyRMB4,532,000forthecorrespondingperiodin2019.

• DuringthePeriod,theGroup’stotalgrossprofitincreasedtoapproximatelyRMB1,310,000,representinganincreaseof

approximately84.3%ascomparedtoapproximatelyRMB711,000forthecorrespondingperiodin2019.

• DuringthePeriod,theGrouprecordedlossattributabletoordinaryequityholdersofapproximatelyRMB7,628,000,

representingan increaseofapproximately15.2%as compared to lossattributable toordinaryequityholdersof

approximatelyRMB6,619,000forthecorrespondingperiodin2019.

• TheBoarddoesnotrecommendthepaymentofaninterimdividendforthethreemonthsended31March2020.

3First Quarterly Report 2020

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the three months ended 31 March 2020

UNAUDITED FIRST QUARTERLY RESULTSTheboardofdirectors(the“Board”) of the Company announces the unaudited condensed consolidated results of the Company

and its subsidiaries (collectively referred toas theGroup) for the threemonthsended31March2020 togetherwith the

comparativeunauditedfiguresforthecorrespondingperiodof2019asfollows:

For the three months ended

31 March

2020 2019

Notes RMB’000 RMB’000

Unaudited Unaudited

REVENUE 4 18,739 4,532

Cost of Sales (17,429) (3,821)

Grossprofit 1,310 711

Otherincomeandgains 4 458 797

Sellinganddistributionexpenses (357) (703)

Administrativeexpenses (9,354) (7,160)

Finance costs (670) (1,055)

LOSSBEFORETAX (8,613) (7,410)

Incometaxcredit 5 985 791

LOSSFORTHEPERIOD (7,628) (6,619)

Attributableto:

Ownersoftheparent (7,628) (6,619)

Non-controllinginterests – –

(7,628) (6,619)

LOSSPERSHARE

ATTRIBUTABLETOORDINARYEQUITY

HOLDERSOFTHEPARENT

Basicanddiluted 7 RMB(0.025) RMB(0.022)


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the three months ended 31 March 2020


31 March

2020 2019

RMB’000 RMB’000

Unaudited Unaudited

OTHER COMPREHENSIVE INCOME/(LOSS)

Othercomprehensiveincometobereclassifiedto

profitorlossinsubsequentperiods:

Exchangedifferenceontranslationofforeignoperations 7 (1,016)

Netothercomprehensiveincometobereclassifiedto

profitorlossinsubsequentperiods 7 (1,016)

Netothercomprehensiveincomenottobe

reclassifiedtoprofitorlossinsubsequentperiods – –

OTHERCOMPREHENSIVEINCOME/(LOSS)

FORTHEPERIOD,NETOFTAX 7 (1,016)

TOTALCOMPREHENSIVELOSS

FORTHEPERIOD (7,621) (7,635)

Attributableto:

Ownersoftheparent (7,621) (7,635)

Non-controllinginterests – –

(7,621) (7,635)


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the three months ended 31 March 2020

Share

capital

Share

premium

account

Merger

reserve

Asset

revaluation

reserve

Statutory

surplus

reserve

Exchange

fluctuation

reserve

Retained

profits Total

Non-

controlling

interests

Total

equity

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At1January2019

(audited) 2,397 98,818 (13,830) 9,134 15,029 3,422 107,229 222,199 (371) 221,828

Loss for the period – – – – – – (6,619) (6,619) – (6,619)

Other comprehensive

incomefortheperiod:

Exchangedifferences

on translation of

foreignoperations – – – – – (1,016) – (1,016) – (1,016)

Total comprehensive

income for the period – – – – – (1,016) (6,619) (7,635) – (7,635)

At31March2019

(unaudited) 2,397 98,818 (13,830) 9,134 15,029 2,406 100,610 214,564 (371) 214,193

Share

capital

Share

premium

account

Merger

reserve

Asset

revaluation

reserve

Statutory

surplus

reserve

Exchange

fluctuation

reserve

Retained

profits Total

Non-

controlling

interests

Total

equity

RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

At 1 January 2020

(audited) 2,397 98,818 (13,830) 9,134 15,029 4,322 83,062 198,932 (6) 198,926

Profitfortheperiod – – – – – – (7,628) (7,628) – (7,628)

Other comprehensive

incomefortheperiod:

Exchangedifferences

on translation of

foreignoperations – – – – – 7 – 7 – 7

Total comprehensive

income for the period – – – – – 7 (7,628) (7,621) – (7,621)

At 31 March 2020

(unaudited) 2,397 98,818 (13,830) 9,134 15,029 4,329 75,434 191,311 (6) 191,305


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)For the three months ended 31 March 2020

1. GENERALTheCompanywasincorporatedintheCaymanIslandsundertheCompaniesLawasanexemptedcompanywithlimited

liabilityon25March2015.TheregisteredofficeaddressoftheCompanyisCricketSquare,HutchinsDrive,P.O.Box2681,

GrandCayman,KY1-1111,CaymanIslands.TheprincipalplaceofbusinessoftheCompanyislocatedatSuite2001,20/F,

ChinachemJohnstonPlaza,186JohnstonRoad,WanChai,HongKong.

TheCompany is an investmentholding company.During thePeriod, theGroup isprincipally engaged in the

environmentalprotectionbusiness,suchaswastewatertreatmentandsoilremediation,throughthedesign,construction,

operationandmaintenanceserviceofrelatedfacilitiesandthetradingofrelatedequipment.

2. BASIS OF PREPARATIONTheunauditedcondensedconsolidated financial statementshavebeenprepared inaccordancewithHongKong

FinancialReportingStandards (“HKFRSs”) (which includeallHongKongFinancialReportingStandards,HongKong

AccountingStandards(“HKAS”)andInterpretations)issuedbytheHongKongInstituteofCertifiedPublicAccountants(the

“HKICPA”),accountingprinciplesgenerallyaccepted inHongKongandthedisclosurerequirementsofHongKong

CompaniesOrdinance(Cap.622ofthelawsofHongKong).Inaddition,theunauditedcondensedconsolidatedfinancial

statementsincludeapplicabledisclosuresrequiredbytheGEMListingRules.

Thecondensedconsolidatedfinancialstatementsareunaudited,buthavebeenreviewedbytheauditcommittee(the

“Audit Committee”)oftheCompany.

3. OPERATING SEGMENT INFORMATIONFormanagementpurposes,theGroupisorganisedintobusinessunitsbasedontheirproductsandservicesandhasfive

reportableoperatingsegmentsasfollows:

(a) theEngineering,ProcurementandConstructionprojects(“EPC Projects”)segmentcomprisesprojectsinwhichan

enterprise iscommissionedbyacustomer toactasageneralcontractor to takecareof theoveralldesign,

procurementandconstructionofwaterorwastewater treatment facilitiespursuant to thecontractandbe

responsibleforthequality,safety,timecontrolandpricingoftheproject;

(b) theconstructionprojects (“Construction Projects”) segmentrepresentsconstructionprojectsother thanEPC

Projects;

(c) theequipmentprojects(“Equipment Projects”)segmentcomprisesprojectsinwhichanenterpriseisengagedby

a customer forprocurementofnecessarymaterials, equipmentandmachinery, installation, testingand

commissioningof theequipmentandmachinery for thetreatment facilitiesaswellasprovisionof technical

consultingservicestoupgradeoroptimisethedesignofthewaterorwastewatertreatmentfacilitiespursuantto

thecontract;

(d) theserviceconcessionarrangement (“Service Concession Arrangement”)segmentcomprisesprojects inwhich

provides theconstructionof sludge treatmentandoperationof thesludgestationuponthecompletionof

constructionforalongperiod,i.e.10years.Thefeereceivedunderthisarrangementfortheprovisionofoperation

services includesaguaranteed tariffbasedonaguaranteedminimumtreatmentvolume togetherwithan

additionaltariffinexcessoftheminimumvolume.Restorationoftheinfrastructuretoaspecifiedconditionbefore

itishandedovertothegrantorattheendoftheservicearrangementisnecessary.Accordingtothetermofsuch

arrangement,theGroupisresponsibleforallofthecostsinconstruction,operationandmaintenanceaswellas

restorationoftheinfrastructure;and



3. OPERATING SEGMENT INFORMATION (continued)

(e) the “Others” segmentcomprises,principally, theGroup’soperationandmaintenance services inwhichan

enterpriseoftheGroupisretainedtooperationandmaintenancewaterorwastewatertreatmentfacilitiesfora

certainperiodforcertainoperationandmaintenancefeesonamonthlyorquarterlybasis.

ManagementmonitorstheresultsoftheGroup’soperatingsegmentsseparately forthepurposeofmakingdecisions

aboutresourceallocationandperformanceassessment.Segmentperformanceisevaluatedbasedonreportablesegment

profit,whichisameasureofadjustedprofitbeforetax.Theadjustedprofitbeforetaxismeasuredconsistentlywiththe

Group’sprofitbefore taxexcept that interest income, financecosts, fairvaluegains fromtheGroup’s investment

propertiesaswellasheadofficeandcorporateexpensesareexcludedfromsuchmeasurement.

Intersegmentsalesandtransfersaretransactedwithreferencetothesellingpricesusedforsalesmadetothirdpartiesat

thethenprevailingmarketprices.

Period ended

EPC

Projects

Construction

Projects

Equipment

Projects

Services

Concession

Arrangement Others Total

31 March 2020 (unaudited) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Segment revenue:

Salestoexternalcustomers 337 2,534 10,389 2,693 2,786 18,739

Segment results (107) 12 774 164 467 1,310

Reconciliation:

Interest income 28

Unallocatedgains 430

Corporate and other unallocated

expenses (9,711)

Finance costs (670)

Lossbeforetax (8,613)

Other segment information:

Depreciationandamortisation 745



3. OPERATING SEGMENT INFORMATION (continued)

Period ended

EPC

Projects

Construction

Projects

Equipment

Projects

Services

Concession

Arrangement Others Total

31 March 2019 (unaudited) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000

Segment revenue:

Sales to external customers – 2,042 – 1,656 834 4,532

Segment results – 221 – 108 382 711

Reconciliation:

Interest income 28

Unallocated gains 769

Corporate and other unallocated

expenses (7,863)

Finance costs (1,055)

Loss before tax (7,410)

Other segment information:

Depreciation and amortisation 750

Geographical informationRevenue from external customers


31 March

2020 2019

RMB’000 RMB’000

Unaudited Unaudited

Mainland China 18,739 4,532

Vietnam – –

18,739 4,532

The revenue information above is based on the locations of the customers.



4. REVENUE, OTHER INCOME AND GAINSRevenuerepresentsthenetinvoicedvalueofgoodssold,afterallowancesforreturnsandtradediscounts;anappropriate

proportionofcontractrevenueofconstructioncontracts;thevalueofservicesrendered;andrentalincomereceivedand

receivablefrominvestmentpropertiesduringtherelevantperiods.

Ananalysisofrevenue,otherincomeandgainsisasfollows:


31 March

2020 2019

RMB’000 RMB’000

Unaudited Unaudited

Revenue

Construction contracts 5,564 3,698

Saleofequipment 10,389 –

Renderingofservices 2,786 834

18,739 4,532

Other income

Bankinterestincome 28 28

Rentalincome 406 379

Governmentgrants 24 390

458 797

19,197 5,329



5. INCOME TAXThestatutoryrateofHongKongprofitstaxwas16.5%(2019:16.5%)ontheestimatedassessableprofitsarisinginHong

Kong.NoprovisionforHongKongprofitstaxwasmadeastheGrouphasnoassessableprofitsarisinginHongKongfor

thethreemonthsended31March2020(2019:Nil).

Pursuanttotherulesandregulationsof theCaymanIslands, theCompany isnotsubject toany incometax inthe

CaymanIslands.

PursuanttothePRCIncomeTaxLawandtherespectiveregulations,thesubsidiarywhichoperatesinMainlandChinais

subjecttoCorporateIncomeTaxatarateof25%onthetaxableincome.Preferentialtaxtreatmentisavailabletothe

Group’sprincipaloperatingsubsidiary,GuangzhouGreatWaterEnvironmentalProtectionCo.,Ltd,sinceitwasrecognised

asaHighandNewTechnologyEnterpriseinMainlandChinaandalowerPRCcorporateincometaxrateof15%hadbeen

appliedduringtheperiodended31March2020and2019.

PursuanttotheVietnamIncomeTaxLawandtherespectiveregulations,thesubsidiarywhichoperatesinVietnamis

subjecttoCorporateIncomeTaxatarateof20%onthetaxableincome.


31 March

2020 2019

RMB’000 RMB’000

Unaudited Unaudited

Current—ElsewhereotherthanHongKong – –

Deferred (985) (791)

(985) (791)

6. DIVIDENDSTheDirectorsdidnotrecommendpaymentofaninterimdividendforthethreemonthsended31March2020(2019:

Nil).

7. LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENTThecalculationof thebasicearningsper share for the threemonthsended31March2020 isbasedon the loss

attributable to ordinary equityholders of RMB7,628,000 (2019: loss attributable to ordinary equityholders

RMB6,619,000),andtheweightedaveragenumberofordinarysharesinissueof300,000,000(2019:300,000,000).

Noadjustmenthasbeenmadetothebasicearningspershareamountspresentedfortheperiodended31March2020

and2019inrespectofadilutionastheGrouphadnopotentiallydilutiveordinarysharesinissueduringtheseperiods.


MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEWTheGroupisaproviderofwastewateranddrinkingwatertreatmentengineeringservicesinthePeople’sRepublicofChina(the

“PRC” or “China”).ThemainbusinessoftheGroupistheprovisionofengineeringservicesforwastewateranddrinkingwater

treatmentfacilities.TheGroupactseitherasthecontractor,whoisresponsibleforthewholeproject fromlaunchtofinal

operationalmanagement(“EPC Projects”),orastheequipmentcontractor,whoisresponsibleforprovidingtechnicaladvice

andequipmentprocurement services for theproject (“Equipment Projects”). TheGroup is also engaged inother

environmentalprotectionprojects,provisionofoperatingandmaintenanceservices (“O&M Projects”) for the customers in

connectionwiththemanagementofwastewatertreatmentanddrinkingwatertreatmentfacilities,aswellasconsultation

servicesinrelationtotheimprovementofwastewateranddrinkingwatertreatmentfacilitiesofvariousconstructions.

Whenthemarketisexpectingsignsofeconomicrecoveryin2020,theworldwideeconomyhasbeenhithardbythesudden

outbreakoftheNovelCoronavirusepidemic.Inthefirstquarterof2020,China’seconomicGDPfellby6.8%,markingthefirst

negativegrowth since recordsbegan in1992.Under the influenceof theNovelCoronavirusepidemic, theoperating

environmentof theGrouphasbecomemoresevere.AlthoughtheGroup’srevenue inthe firstquarterof2020 increased

significantlyoverthecorrespondingperiodlastyear, therelativegrossprofitmarginalsodeclinedsignificantlyduetothe

economicdownturn,togetherwiththeincreaseofapproximatelyRMB2.2millionintheadministrativeexpensesduringthe

Period,resultingintheincreaseinlossforthefirstquarterof2020ascomparedtothecorrespondingperiodlastyear.

During thePeriod, the revenueof theGroup increasedbyapproximatelyRMB14,207,000,or313.5% toapproximately

RMB18,739,000ascomparedtothecorrespondingperiodin2019.DuringthePeriod,theGrouprecognisedapproximately

RMB337,000inrevenuefromtheEPCProjects,approximatelyRMB2,534,000inrevenuefromconstructionprojectsotherthan

theEPCProjects(“Construction Projects”),approximatelyRMB10,389,000inrevenuefromEquipmentProjects,approximately

RMB2,693,000 in revenue fromthedevelopment, constructionandoperatingagreementofa sewage treatmentproject

(“Service Concession Arrangement”)andapproximatelyRMB2,786,000 inrevenuefromotherenvironmentalprotection

projects for thefirstquarterof2020. Incomparison,approximatelyRMB2,042,000 inrevenuefromConstructionProjects,

approximatelyRMB1,656,000inrevenuefromServiceConcessionArrangementandapproximatelyRMB834,000inrevenue

fromotherenvironmentalprotectionprojectswasrecognisedinthecorrespondingperiodin2019.

LossattributabletoordinaryequityholdersforthePeriodamountedtoapproximatelyRMB7,628,000,representinganincrease

ofapproximately15.2%ascomparedtolossattributabletoordinaryequityholdersofapproximatelyRMB6,619,000lastyear.

OUTLOOKUndertheinfluenceoftheNovelCoronavirusepidemic,thelosstrendoftheGroupisexpectedtocontinueinthefirsthalfof

2020.Fortunately,theChinesegovernmenthasbeenactivelytakingmeasurestofightagainsttheNovelCoronavirusepidemic.

Itisbelievedthat,aftertheepidemic,theChineseGovernmentwillstrivetorevitalizetheeconomy.AccordingtotheNational

Bureauof Statistics, theeconomic indicators improved significantly inMarch2020. It is expected that theeconomic

performanceinthesecondquarterwillbebetterthanthesameinthefirstquarter,andthegreaterperformanceinthesecond

halfascomparedtothefirsthalf.Themarketalsogenerallyexpectsthattherewillbeastrongreboundinthesecondandthird

quarterswithahopetomaintainpositivegrowththroughouttheyear.However,itisestimatedthatsignificanttimewouldbe

requiredtofightagainsttheepidemicandrestoretheglobaleconomy.Duringsuchperiod,thebusinessemphasisoftheGroup

in2020willlayonmaintainingstableincomeandcontrollingcostsforexistingprojects,developingoutstandingnewprojects

aswellaspreventingpotentialnewrisks.

However, theGroupbegantoseek formorechanges in thesecondhalfof2019toactively respondtotherelatedtrend.

Externally,regardlessofbusinessdirectionoritsformofimplementation,theGrouphasconsciouslyextendedtotheindustries

related to itsmainbusiness inbothupstreamanddownstreamdirections.TheGroupwill consideradditionalbusiness

expansionbymeansof,interalia,investmentwithconstructionorconstructionwithoperation,soastooffermorechoicesto

itscustomers,whileexpandingthespectrumofservicesforthecustomers.



Benefitingfromthecontractsenteredintothroughout2019,theGrouphasseveralprojectsthatarecommencingconstruction

in2020,suchasthewatertreatmentequipmentprojectofChengduWanxingPowerPlant (成都萬興電廠)withacontract

amountofapproximatelyRMB20,000,000andthewatertreatmentengineeringprojectofPacificTextilesVietnam(互太越南紡

織)withacontractamountofapproximatelyUSD9,000,000.SuchprojectswillallowtheGrouptomaintainstableoperationsin

2020.

Therefore,theDirectorsandmanagementoftheGrouparecautiouslyoptimisticabouttheGroup’sbusinessin2020.

Inconclusion,theGroupconsidersthatthemarketconditionmaynotbedesirableinviewoftheglobaleconomicdownturn,

andacertainperiodoftimeisneededforrevivingfromtheprofoundimpactfromfightingagainsttheNovelCoronavirus

epidemicandfortheeconomicrecovery.However,byvirtueoftheGroup’sconfidenceintheChinesegovernment,itisbelieved

thattherewouldbeapromisingfuturewhetherintermsofrelevantpoliciesormacroeconomics,whereasitisalsoprobable

thattheGroup’sjudgementaboutthemarketaswellasitsadjustmentinrelationtoitmayimproveitscurrentstateofaffairs

infuture.TheGroupwilloptimisticallyfaceitsfuturechallengesinanempiricalanddiligentmannerandbyitsoperational

strategyofbeinggrounded.

FINANCIAL REVIEWOperating revenueFor thePeriod, theGroup’soperatingrevenueamountedtoapproximatelyRMB18,739,000, representingan increaseof

approximately313.5%orRMB4,532,000comparedtothecorrespondingperiodin2019.

EPC Projects and Construction Projects

FortheEPCProjects,theGroupassumestheroleofmaincontractorinchargeofoverallprojectmanagementofconstructinga

treatmentplant from launch tooperation forapredeterminedcontractamount.Asanengineering,procurementand

constructioncontractor,theGroupprovidesengineeringdesignofthetreatmentfacilities,procurenecessaryrawmaterialsand

appoint sub-contractors to construct the facilities. TheGroupalsoengages in constructionprojects related toother

environmentalprotectionsectors(suchassoilremediationprojectandfluegastreatmentproject, involvingtheprovisionof

engineeringandprocurementservicesfortheprojectowner).

— Revenue relating to EPC Projects

ForthePeriod,therevenuegeneratedfromtheEPCProjectswasapproximatelyRMB337,000(2019:nil).Therevenue

fromtheEPCProjectsinthefirstquarterof2020wasprimarilyattributabletotherecognitionofrevenuefromoneEPC

Project.

— Revenue relating to Construction Projects

ForthePeriod,therevenuegeneratedfromConstructionProjectswasapproximatelyRMB2,534,000(2019:approximately

RMB2,042,000),representinganincreaseofapproximately24.1%orRMB492,000overthecorrespondingperiodin2019.

Theincreaseintherevenuewasprimarilyattributabletotherevenueinthefirstquarterof2020whichwasderivedfrom

oneConstructionProject,ascomparedtothecorrespondingrevenueinthefirstquarterof2019whichwasderivedfrom

threeConstructionProjects.



Equipment Projects

ForEquipmentProjects,theGroupmainlyprovidesprocurementservicestoapre-definedsectionofaproject.Indetermining

theequipmentandmachinerybestsuitedfortheprojectoperator’srequirements,theGroup’stechnicalteamoftenneedsto

workcloselywiththecustomerinidentifying,evaluatingandselectingdifferentequipmentoptionsbeforetheprocurement

teamcomesintoplay.

ForthePeriod,therevenuegeneratedfromEquipmentProjectswasapproximatelyRMB10,389,000 (2019:nil).Therevenue

fromEquipmentProjectsinthefirstquarterof2020wasprimarilyattributabletooneEquipmentProject.

Service Concession Arrangement

ForServiceConcessionArrangement, theGrouphasacquiredasludgetreatmentproject inawastewater treatmentplant

locatedinDashadifromGuangzhouSewageinthethirdquarterof2018.TheGroup,asacontractor, isresponsibleforthe

development,constructionandtheoperationofthesludgetreatmentprojectforatermof10years.Theconstructionofthe

projecthasbeencompletedandiscurrentlyintrialoperation.Theprojectisexpectedtoofficiallycommenceitsoperationlater

thisyear.

For thePeriod, the revenuegenerated fromtheServiceConcessionArrangementsegmentamounted toapproximately

RMB2,693,000 (2019:approximatelyRMB1,656,000), representingan increaseofapproximately62.6%orRMB1,037,000as

comparedto thecorrespondingperiod in2019.The increase inrevenuewasprimarilyattributable to therecognitionof

revenueofapproximatelyRMB2,693,000inserviceincomefortheServiceConcessionArrangementduringthetrialperiodin

the firstquarterof2020,while thecorrespondingrevenue inthe firstquarterof2019was therevenueofapproximately

RMB1,656,000fortherecognitionofconstructionprogress.

Others

TherevenueundertheothersegmentincludedrevenueattributabletoO&MProjectsandtechnicaladvisoryservices.Asat31

March2020,theGrouphadonewastewatertreatmentO&MProjectandfourdrinkingwatertreatmentO&MProjectsonhand.

ForthePeriod,therevenuegeneratedfromrenderingofmaintenanceservicesamountedtoapproximatelyRMB2,786,000

(2019:approximatelyRMB834,000),representinganincreaseofapproximately234.1%orRMB1,952,000ascomparedtothe

correspondingperiodin2019.Theincreasewasprimarilyattributableto(i)onetechnicaladvisoryprojectinthefirstquarterof

2020withrevenuecontributionofapproximatelyRMB2,170,000ascomparedtoonetechnicaladvisoryprojectwithrevenue

contributionofapproximatelyRMB87,000onlyinthecorrespondingperiodin2019;and(ii)O&Mprojectswhichcontributed

approximatelyRMB616,000 in revenue in the firstquarterof2020as compared toapproximatelyRMB747,000 in the

correspondingperiodin2019.

Other income and gainsFor thePeriod,other incomeandgainsamounted toapproximatelyRMB458,000 (2019:approximatelyRMB797,000),

representingadecreaseofapproximately42.5%orapproximatelyRMB339,000ascomparedtothecorrespondingperiodin

2019.Thedecreasewasprimarilyattributable to thedecrease in the incomefromgovernmentgrantsofapproximately

RMB366,000inthefirstquarterof2020ascomparedtothecorrespondingperiodin2019.



Cost of salesForthePeriod,thecostofsalesoftheGroupamountedtoapproximatelyRMB17,429,000(2019:approximatelyRMB3,821,000),

representinganincreaseofapproximately356.1%orapproximatelyRMB13,608,000ascomparedtothecorrespondingperiod

in2019.

The increase in costof saleswasmainlydue to increasedoperating revenue. The subcontracting costs increased to

approximatelyRMB2,482,000 for the threemonthsended31March2020 fromapproximatelyRMB1,492,000 for the

correspondingperiod in2019.Thecostsofrawmaterial increasedtoapproximatelyRMB10,547,000for thethreemonths

ended31March2020fromapproximatelyRMB1,574,000forthecorrespondingperiodin2019,representinganincreaseof

approximately570.1%orapproximatelyRMB8,973,000overthecorrespondingperiodin2019.

Gross profitForthePeriod,theGroup’sgrossprofitofapproximatelyRMB1,310,000(2019:approximatelyRMB711,000),representingan

increaseofapproximately84.2%orapproximatelyRMB599,000ascomparedtothecorrespondingperiodin2019.Theincrease

ingrossprofitoftheGroupwasmainlyduetothefactthattherevenueinthefirstquarterof2019increasedbyapproximately

313.5%ascomparedtothecorrespondingperiodoflastyear,butthesignificantdeclineingrossprofitmarginoffsetthegrowth

inrevenuefrombusinessduetotheeffectofglobaleconomicenvironmentdownturnfactor.

Selling and distribution expensesFor thePeriod, the sellinganddistributionexpensesof theGroupamounted toapproximatelyRMB357,000 (2019:

approximatelyRMB703,000),representingadecreaseofapproximately49.2%orapproximatelyRMB346,000comparedtothe

correspondingperiodin2019.Thedecreaseinthesellinganddistributionexpenseswasmainlyattributedto(i)thedecreasein

salariesandemployeebenefitofapproximatelyRMB270,000; (ii) thedecrease in travellingexpenseofapproximately

RMB27,000;and(iii)thedecreaseinbusinessentertainmentfeesofapproximatelyRMB59,000.

Administrative expensesForthePeriod,theadministrativeexpensesof theGroupamountedtoapproximatelyRMB9,354,000 (2019:approximately

RMB7,160,000), representing an increaseof approximately 30.6%or approximatelyRMB2,194,000 compared to the

correspondingperiodin2019.Theincreaseintheadministrativeexpenseswasmainlyattributedtothoserelatedexpenses

arisingfromtheGroup’supgradingconstructionqualificationduringthePeriod.

Loss for the PeriodForthePeriod,thelossfortheperiodamountedtoapproximatelyRMB7,628,000ascomparedtothelossofapproximately

RMB6,619,000forthecorrespondingperiodin2019.

DIVIDENDTheDirectorsdonotrecommendthepaymentofaninterimdividendforthethreemonthsended31March2020(2019:nil).



CORPORATE GOVERNANCE PRACTICESTheBoardiscommittedtomaintainingagoodcorporategovernancestandard,withthechairmanbeingprimarilyresponsible

forestablishingrelevantpracticesandprocedures.TheBoardbelievesthatagoodcorporategovernancestandardwillprovide

aframeworkfortheGrouptoformulateitsbusinessstrategiesandpolicies,andmanagetheassociatedrisksthrougheffective

internalcontrolprocedures.ItwillalsoenhancethetransparencyoftheGroupandstrengthenaccountabilitytoshareholders

andcreditors.ThereforetheBoardhasreviewedandwillcontinuetoreviewandimprovetheCompany’scorporategovernance

practicesfromtimetotime.

TheCompanyadoptedtheCorporateGovernanceCode(the“CG Code”)containedinAppendix15totheGEMListingRulesasits

owncodeofcorporategovernance.SaveforcodeprovisionA.2.1of theCGCode,thattherolesof thechairmanandchief

executiveoftheCompanyshouldbeseparateandshouldnotbeperformedbythesameindividual,theBoardissatisfiedthat

theCompanyhadcompliedwiththeCGCodeforthePeriod.Mr.XieYang(“Mr. Xie”)ischairmanandthechiefexecutiveofficer

oftheCompany.Withextensiveexperience inthewastewaterandwatertreatmentengineeringservices industry,Mr.Xie is

responsiblefortheGroup’soverallstrategicplanningandmanagementof itsbusiness.TheBoardconsidersthatvestingthe

rolesofchairmanandchiefexecutiveofficerinMr.XieisbeneficialtothebusinessprospectsandmanagementoftheGroup

andthebalanceofpowerandauthorityisensuredbytheoperationoftheseniormanagementandtheBoard,whichcomprises

experiencedindividuals.TheBoardcomprisedtwoexecutiveDirectors(includingMr.Xie),onenon-executiveDirectorandthree

independentnon-executiveDirectorsduringthePeriodandthereforehassufficientindependentelementsinitscomposition.

DIRECTORS’ INTERESTS IN CONTRACTS OF SIGNIFICANCEDuringthePeriod,noneoftheDirectorshadmaterialinterests,eitherdirectlyorindirectly,inanycontractofsignificanceto

thebusinessoftheGrouptowhichtheCompanyoranyofitssubsidiarieswasaparty.

COMPETING INTERESTSNoneoftheDirectorsorthecontrollingshareholdersoftheCompanyoranyoftheirrespectivecloseassociates (asdefined

undertheGEMListingRules)hadanyinterestinabusinessthatcompetesormaycompete,eitherdirectlyorindirectly,with

thebusinessoftheGroup,orofanyotherconflictsofinterestwhichanysuchpersonhasormayhavewiththeGroupduring

thePeriod.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIESDuringthePeriod,neithertheCompanynoranyof itssubsidiarieshadpurchased,soldorredeemedanyoftheCompany’s

listedsecurities.



INTERESTS AND SHORT POSITIONS OF DIRECTORS AND CHIEF EXECUTIVE IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE GROUP AND ITS ASSOCIATED CORPORATIONSAsat31March2020,theinterestsandshortpositionsoftheDirectorsandchiefexecutiveoftheCompanyintheordinary

shares(the“Shares”),underlyingSharesanddebenturesoftheCompanyoranyofitsassociatedcorporations(asdefinedin

PartXVoftheSecuritiesandFutureOrdinance(Chapter571ofthelawsofHongKong)(the“SFO”))whichwererequiredtobe

notifiedtotheCompanyandtheStockExchangeunderDivisions7and8ofPartXVoftheSFO(includinganyinterestsorshort

positionswhichtheyaretakenordeemedtohaveundersuchprovisionsoftheSFO)orrequiredtobeenteredintheregisterof

theCompanypursuanttosection352oftheSFO,orrequiredtobenotifiedtotheCompanyandtheStockExchangepursuant

toRules5.46to5.67oftheGEMListingRuleswereasfollows:

Long positions in the ordinary shares of the Company (the “Shares”)

Name of director Capacity

Number of

Shares

Approximate

percentage of

the total

number of

Shares in issue

(Note 1)

Mr.XieYang (Note 2) Interest in controlled

corporation

91,350,000(L) 30.45%

Notes:

1. Theletter“L”denotesalongposition.

2. TheseSharesareownedbyOceanicExpertInvestmentsLimitedwhichiswhollyownedbyPerfectWaveHoldingsLimited,the100%interestsofwhichisin

turnbeneficiallyownedbyMr.XieYang.Accordingly,Mr.XieYangistakenordeemedtobeinterestedinthe91,350,000SharesheldbyOceanicExpert

InvestmentsLimitedbyvirtueoftheSFO.

Saveasdisclosedabove,asat31March2020,noneoftheDirectorsandchiefexecutiveoftheCompanyhadanyinterestor

shortpositionintheShares,underlyingsharesanddebenturesoftheCompanyoranyofitsassociatedcorporations(asdefined

inPartXVoftheSFO)whichwererequiredtobenotifiedtotheCompanyandtheStockExchangeunderDivisions7and8of

PartXVoftheSFO(includinganyinterestsorshortpositionswhichtheyaretakenordeemedtohaveundersuchprovisionsof

theSFO)orrequiredtobeenteredintheregisteroftheCompanypursuanttosection352oftheSFO,orrequiredtobenotified

totheCompanyandtheStockExchangepursuanttoRules5.46to5.67oftheGEMListingRules.



THE INTERESTS OF SUBSTANTIAL SHAREHOLDERS AND THE INTERESTS AND SHORT POSITION OF OTHER PERSONS IN THE SHARES AND UNDERLYING SHARESAsat31March2020,sofarastheDirectorsareaware,theinterestsorshortpositionsownedbythefollowingpersons(other

thantheDirectorsorchiefexecutiveoftheCompany)intheSharesorunderlyingSharesoftheCompanywhicharerequiredto

benotifiedtotheCompanyandtheStockExchangeunderDivisions2and3ofPartXVoftheSFOorwhicharerequiredtobe

recordedintheregisteroftheCompanyrequiredtobekeptundersection336oftheSFOareasfollows:

Long positions in the Shares

Name of shareholder(s) Capacity

Number of

Ordinary

Shares

Approximate

percentage of

the total

number of

Shares in issue

(Note 1)

OceanicExpertInvestmentsLimited(Note 2) Beneficialowner 91,350,000(L) 30.45%

PerfectWaveHoldingsLimited(Note 2) Interest in controlled corporation 91,350,000(L) 30.45%

WatermanGlobalLimited(Note 3) Beneficialowner 67,117,500(L) 22.37%

KeenLeapInvestmentsLimited(Note 3) Interest in controlled corporation 67,117,500(L) 22.37%

KeenLeapInvestmentsLimited Beneficialowner 2,732,000(L) 0.91%

Mr.ZhangYao(Note 3) Interest in controlled corporation 69,849,500(L) 23.28%

GreatTimeVenturesLimited(Note 4) Beneficialowner 44,032,500(L) 14.68%

TopmanVenturesLimited(Note 4) Interest in controlled corporation 44,032,500(L) 14.68%

Mr.SongXiaoXing(Note 4) Interest in controlled corporation 44,032,500(L) 14.68%

Notes:

1. Theletter“L”denotesalongposition.

2. Mr.XieYangbeneficiallyownstheentire issuedsharecapitalofPerfectWaveHoldingsLimitedwhichinturnwhollyownsOceanicExpert Investments

Limitedwhichheld91,350,000Shares.

3. Mr.ZhangYaobeneficiallyownstheentireissuedsharecapitalofKeenLeapInvestmentsLimitedwhichheld2,732,000Sharesdirectlyandinturnwholly

ownsWatermanGlobalLimitedwhichheld67,117,500Shares.

4. Mr.SongXiaoXingbeneficiallyownstheentireissuedsharecapitalofTopmanVenturesLimitedwhichinturnwhollyownsGreatTimeVenturesLimited

whichheld44,032,500Shares.

Saveasdisclosedabove,asat31March2020,theDirectorsarenotawareofanyinterestsorshortpositionsownedbyany

persons(otherthantheDirectorsorChiefExecutiveoftheCompany)intheSharesorunderlyingSharesoftheCompanywhich

wererequiredtobedisclosedunderDivisions2and3ofPartXVoftheSFOorwhichwererequiredtoberecordedinthe

registeroftheCompanyrequiredtobekeptundersection336oftheSFO.



DIRECTORS’ SECURITIES TRANSACTIONSTheCompanyhasadoptedacodeofconductregardingsecuritiestransactionsbytheDirectors,itsemployees,andthedirectors

andemployeesofitssubsidiariesandholdingcompanies,whomaylikelypossessinsideinformationontheCompanyorits

securities,ontermsnolessexactingthantherequiredstandardofdealingssetoutinRules5.48to5.67oftheGEMListing

Rules.TheCompanyhadalsomadespecificenquiryofalltheDirectorsandtheCompanywasnotawareofanynon-compliance

withtherequiredstandardofdealingsregardingsecuritiestransactionsbytheDirectorsduringthePeriod.

REVIEW OF FINANCIAL STATEMENTDuringthePeriod,theauditcommitteeoftheCompany(“Audit Committee”)comprisedthreeindependentnon-executive

Directors,namely,Mr.TseChiWai,Ms.BaiShuangandMr.HaChengYong.Mr.TseChiWai is thechairmanoftheAudit

Committee.

TheAuditCommitteehasreviewedtheunauditedcondensedconsolidatedfinancialstatementsoftheGroupforthePeriod.

ByorderoftheBoard

Great Water Holdings Limited

XIE YANG

Chairman

Guangzhou,thePRC,11May2020

As at the date of this report, the executive Directors are Mr. XIE Yang and Mr. HE Xuan Xi; the non-executive Director is Ms. GONG

Lan Lan and the independent non-executive Directors are Ms. BAI Shuang, Mr. HA Cheng Yong and Mr. TSE Chi Wai.

This report, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance

with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all

reasonable enquiries, confirm that, to the best of their knowledge and belief, the information contained in this report is accurate

and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would

make any statement herein or this report misleading.

This report will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for at least 7 days

from the date of its posting and be posted on the website of the Company at www.greatwater.com.cn.

First Quarterly Report 第一季度業績報告€¦ · Finance costs (670) (1,055) LOSS BEFORE TAX...

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