11
CITIC Envirotech Ltd.
Annual
Report
2015
land starts to become scarce and the tightening of discharge
standard rises beyond Grade 1A standard, the demand for
MBR technology is set to rise. This would benefit the Group as
our strength lies in advanced wastewater treatment technology
which requires less land and delivers better-quality water. We
also see strong revenue drivers from recurring water treatment
revenue with the government’s push to roll out more PPP
projects aimed at harnessing long-term partnerships with
the private sectors to undertake plant upgrading as well as
improving operational efficiency.
FINANCIAL SCORECARD
CEL recorded a 9-month total revenue of $274.8 million, which
was 4.5% lower than the last corresponding period ended
31 December 2014. This was mainly due to the decrease in
engineering business from $168.9 million to $114.6 million,
representing a decrease of $54.3 million or 32.1%. However,
after the adjustment for one-off items, the Group generated
a net profit of $49.1 million as compared to $39.4 million for
the last corresponding period ended 31 December 2014,
representing an increase of $9.7 million or 24.6%.
COST AND EXPENSES
Materials purchased, consumables used and subcontractors’
fees decreased to $112.0 million from $173.5 million,
representing a decrease of $61.5 million or 35.5% as compared
to the last corresponding period ended 31 December 2014.
The decrease was consistent with the decrease in engineering
revenue and membrane sales to $168.3 million from $221.7
million, representing a decrease of $53.4 million or 24.1%
as compared to the last corresponding period ended 31
December 2014. Gross profit margin increased from 27.7% to
31.8%.
Employee benefits expense increased to $34.0 million from
$18.9 million, representing an increase of $15.1 million or
79.7% as compared to the last corresponding period ended 31
December 2014. The increase was mainly due to the additional
staff strength for the operation and maintenance of the new
treatment plants and manufacturing facilities of membrane
products of Memstar.
Depreciation and amortisation expenses increased to $16.0
million from $6.5 million, representing an increase of $9.5
million or 146.7% as compared to the last corresponding
period ended 31 December 2014. The increase was mainly due
to the amortisation of intangible assets relating to the newly
acquired concessions.
Finance costs increased from $20.7 million to $29.2 million,
representing an increase of $8.5 million or 41.4% as compared
to the last corresponding period ended 31 December 2014.
The increase was mainly due to the additional finance costs
arising from the newly issued bond and bank borrowings
during the period.
BALANCE SHEET REVIEW
The Group’s current assets increased from $443.3 million as
at 31 March 2015 to $972.7 million as at 31 December 2015.
The increase was mainly due to the increase in cash and bank
balances from $113.8 million as at 31 March 2015 to $540.5
million, representing an increase of $426.7 million. The increase
was mainly due to the proceeds from the newly issued medium
term notes (“MTN”) of $225 million and US$175 million
perpetual capital securities during the financial period.
The Group’s non-current assets increased from $943.4 million
as at 31 March 2015 to $1,200.1 million as at 31 December
2015. The increase was mainly due to the addition of service
concession receivables during the financial year.
The Group’s current liabilities increased from $301.3 million as
at 31 March 2015 to $584.7 million as at 31 December 2015.
The increase was mainly due to the reclassification of first series
of MTN from non-current to current since the first series MTN
will be due in September 2016. In addition, new loans were
taken to finance the acquisition of investment projects.
The Group’s non-current liabilities increased from $344.1 million
as at 31 March 2015 to $447.5 million as at 31 December
2015. The increase was mainly due to the newly issued MTN
of $225 million during the financial period. The increase was
offset by the decrease in convertible bonds of $58.8 million and
the reclassification of the first series MTN to current liabilities.
During the financial period, the convertible bonds were fully
converted into new shares by KKR.
The Group’s total equity increased from $741.3 million as at 31
March 2015 to $1,140.8 million as at 31 December 2015. The
increase was mainly due to:
a) 30,303,031 of new ordinary shares were placed to CENVIT
(Cayman) Company Limited at $1.65 a share;
b) 117,926,189 of new ordinary shares were issued to KKR
China Water Investment Holdings Limited pursuant to the
conversion of US$44 million of the convertible bonds;
c) 16,174,500 of new ordinary shares were issued pursuant to
the conversion of the Employee Share Option Scheme; and
d) Issuance of perpetual capital securities of US$175 million.
CASHFLOW AND LIQUIDITY
The net cash from financing activities of the group increased
from $113.8 million to $635.2 million compared to the last
corresponding year ended 31 March 2015. The increase was
mainly due to the proceeds from the MTN of $222.0 million,
bank borrowings of $171.8 million, and perpetual capital
securities of $242.1 million during the financial period.
DIVIDENDS AND APPRECIATION
To show our appreciation to our loyal shareholders, the Board
of Directors has proposed a dividend of 0.36 Singapore cents
per share for the 9-month financial period.
Finally, I would like to thank our valued stakeholders for your
strong support of the Company. I would also like to extend my
sincere appreciation to my team for their dedication and hard
work.
Yours Faithfully,
Dr Lin Yucheng
Group CEO & Executive Director
