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TIDMACE
RNS Number : 7260F
Auhua Clean Energy Plc
20 June 2012
AUHUA CLEAN ENERGY PLC
(the "Company" or "Auhua" or "the Group")
FINAL RESULTS
Auhua Clean Energy plc, the AIM quoted (AIM: ACE) environmental technology group based in the Shandong Province of Eastern China, today announces the final consolidated results of its trading group for the year ended 31 December 2011, together with the final results of the Company for the period ended 31 December 2011.
Auhua Holdings Group highlights (1)
-- Revenue for the year increased by 24.2% to RMB 168.5 million: GBP 16.3 million (2010: RMB 135.6 million: GBP 13.0 million)
-- Net profit after tax rose by 12.5% to RMB 42.3 million: GBP 4.1 million (2010: RMB 37.6 million: GBP 3.6 million)
-- Gross profit margin of 46% (2010: 45%)
-- Cash balances at 31 December 2011 of RMB 11.9 million: GBP 1.1 million (2010: RMB 2.4 million: GBP 0.23 million)
-- Pro-forma basic earnings per share of RMB 0.71; 6.8 pence (2010: RMB 0.63; 6.0 pence)
-- Net assets of RMB 86.1 million: GBP 8.3 million (2010: RMB 64.6 million: GBP 6.2 million)
-- Real estate investment in China grew by 23.5% in Q1/2012 with growth derived predominantly from 2nd and 3rd tier cities where the majority of the Company's customers are based
-- China's State Council remains committed to renewal energy by approving RMB 36.3 billion (GBP 3.5 billion) in subsidy programmes to promote the sales of energy-saving products
-- For the first four months of 2012 trading is in line with management expectations. Achieved revenues of RMB 61.0 million (GBP GBP6.0 million) and sales of 19,000 units. Book orders as at 30 April amounted to RMB 86.0 million (GBP 8.4 million)
* RMB amounts translated using the following exchange rates as appropriate:
RMB 1 : GBP 0.10207 (as at 30 April 2012)
RMB 1 : GBP 0.10358 (for 2011)
RMB 1 : GBP 0.10454 (for 2010)
1. Auhua Holdings Group comprises Auhua Holdings Pte Ltd and its wholly owned subsidiaries Shandong Auhua New Energy Co., Ltd and Weihua Auhua New Energy Co., Ltd. Auhua Holdings Pte Ltd was acquired by the Company on 12 December 2011. The Company's first set of consolidated accounts will be in respect of the six months ended 30 June 2012. As the Company was incorporated only on 21 November 2011 for the purposes of the AIM listing and has no other activities, the results for the year ended 31 December 2011 reflect only Auhua Holdings Group.
Raphael Tham, Non-Executive Chairman of Auhua Clean Energy plc, commented:
"We are pleased with the successful listing of Auhua on AIM in April when we became the first solar water heater company to be listed from China. The listing provides us with a platform for future growth and raises our profile in the solar water heater industry in China. We are well positioned to take advantage of the growing demand for efficient renewable energy solutions which are supported by government policies and incentives."
For further information:
Auhua Clean Energy Plc
Raphael Tham, Non-Executive Tel: +65 6536 0880
Chairman
www.auhuacleanenergy.com
Northland Capital Partners Limited
Tim Metcalfe Tel: +44 (0) 20 7796 8800
Edward Hutton
Lauren Kettle
Cardew Group
Shan Shan Willenbrock Tel: +44 (0) 20 7930 0777
Lauren Foster
Notes to Editors:
Auhua Clean Energy is an environmental technology group based in the Shandong Province of Eastern China specialising in the development and application of green energy and energy efficient solar water heating solutions. In particular, the Group is focused on the manufacture and sale of solar energy water heating systems.
Auhua Clean Energy operates through its wholly owned subsidiaries Shandong Auhua New Energy Co., Ltd and Weihua Auhua New Energy Co., Ltd., of which Auhua Holdings Pte Ltd is the intermediate holding company.
CHAIRMAN'S STATEMENT
Introduction
Auhua successfully listed on AIM on 2 April 2012. Our listing represents a significant milestone and we believe it will create new business opportunities as well as raise the Group's profile in the solar water heater industry in China.
We are in a growing market for solar water heating systems, supported by the Chinese government's continued emphasis and commitment to reduce carbon emissions by 45 per cent per unit of GDP from 2005 levels by 2020. In May this year, the National Development and Reform Commission of China (the country's top economic planning agency) named six regions for their failure to do enough to conserve energy in the first quarter of 2012. In the same month, China's State Council announced the approval of RMB 36.3 billion (GBP 3.5 billion) in subsidy programmes to promote sales of energy-saving products. China faces both heavy pollution issues and an urgency to reduce energy consumption. It is committed to the renewable energy sector and the solar water heater industry. As a technology leader in split-unit solar water heater systems, we are well positioned to capitalise on the growing demand for efficient renewable energy solutions which are supported by government policies and incentives.
In the period under review, trading was in line with expectations, driven by strong demand and supportive government policies. Revenues increased by 24.2% to RMB 168.5 million (2010: RMB 135.6 million) and profit before tax rose to RMB 57.1 million from RMB 50.1 million in 2010. Net profit after tax rose by 12.5% to RMB 42.3 million (RMB 37.6 million). Cash balances as at 31 December 2011 were RMB 11.9 million (2010: RMB 2.4 million) and book orders amounted to RMB 93.0 million.
Domestic China Market
In October 2011, the Purchasing Managers' Index ("PMI") of China contracted for the first time since February 2009 to 49.0. PMI is an indicator of purchasing managers' acquisition of goods and services and anything below 50.0 shows a decline or contraction of manufacturing.
This disappointing manufacturing data coupled with the Eurozone debt crisis and a weak US economy resulted in the Central Bank of China reducing the reserve-ratio requirement ("RRR") three times since December 2011. In December 2011 it reduced RRR by 50 basis points, which was the first reduction since 2008. Then in February 2012, the Central Bank of China reduced RRR by 50 basis points and in May 2012 they cut the RRR by a further 50 basis points.
The cuts will provide much needed liquidity for the market to ensure continued economic growth. It is widely believed that China's decision to reduce RRR will benefit smaller banks, brokerages, material producers, property developers and insurance companies the most.
China Property Market
The Chinese government's measures in 2011 to slow down the property market have been effective in the residential sector, with prices stalling in a number of cities. These measures include banning of second home purchases, increasing minimum down payments for properties, scaling back housing-related tax breaks and introducing property tax in two cities (Shanghai and Chongqing). Despite the slower economic conditions, real estate investment in China grew by 23.5% in Q1/2012, concentrated in the 2(nd) and 3(rd) tier cities, according to the China Economic Information Network.
The recent cuts in RRR are a positive sign for the property market and equities alike. The cuts signal a shift in policy focus from anti-inflation to growth stability. The latest cut releases an estimated RMB 400 billion that can be used for bank lending. In early February, China also made it easier for the village population to get a pass to work in 3rd and 4th tier cities. This, coupled with the seven million public housing units announced by the Central government to be built in 2012, provides a positive indication that the property market (at least in the 2(nd) -4(th) tier cities) will continue to grow in the short term.
Strategy
Business-to-Business Focus
The Group's focus this year is to build strategic relationships with mid-to-large scale pan-provincial property developers in China. These property developers tend to be more conscious of overall project quality and therefore pay more attention to the quality of the products and fittings they use in their developments. While the sales cycle may be longer, the projects are usually larger and carry less risk. Additionally, working with property developers in the longer term should also provide a steadier revenue stream.
Grow Market Share
The Group will be expanding its sales team to reinforce its market share in Shandong and neighbouring north-eastern provinces. This will include the introduction of sales representative offices to build relationships with the local urban development authorities and property developers. In non-key provinces, the Group will continue to work with distributors to sell its products. This will involve providing continuous training and technical support to ensure that projects are delivered effectively and on time.
The Group also acts as an OEM (Original Equipment Manufacturer) and supplies products to other customers for sale under their brand name. This is expected to increase overall production in the short-term. As the Company grows and achieves its objectives, it is expected that OEM sales opportunities will be scaled back and the related production capacity redeployed to the Group's own brand products.
Since its listing, the Group has also initiated discussions with several overseas solar water heater distributors, installers and property developers. We believe that while China remains our core market, our technology and lower manufacturing costs will make our products competitive in the developed and developing markets in Europe, the Americas and South East Asia.
Enhance Research and Development
Auhua continues to invest in its in-house research team to explore new energy efficient and clean-energy technologies. The team's focus includes integrating the Group's solar water heating systems with geothermal heating and cooling systems, the continuous improvement in energy transference in Auhua's products and stress-testing of water heaters. We are also collaborating with the research teams of local Chinese universities in several projects.
To support the first stage of our international strategy, we have also initiated discussions with research institutes in other countries and are currently reviewing a number of joint research possibilities.
New Production Line - Rushan, Weihai City
The Group is well placed to scale its production with its new 40,000 units per annum Rushan factory completed. The factory in Rushan commenced trial production in September 2011 and was fully commissioned in October 2011. We expect that the full benefits of the new production facility will be reflected in FY 2012.
In addition to the increased capacity, the new factory has been designed to improve workflow integration and is semi-automated. This is expected to reduce production costs and increase quality and efficiency. Our technical team also designed and built many of the specialty stamping and moulding equipment for our manufacturing process and these new designs are currently patent-pending.
People
The Board recognises the importance of building an international business to meet overseas demand. In order to facilitate the development phase of the Group's international business, the Board is delighted to announce the appointment of Beh Chee Yang, Ph.D. as General Manager (Singapore) and Vice President, Business Development of the Group. Dr. Beh, aged 45 was previously head of the Singapore-based private equity operations of the Sharjah, UAE Sovereign Wealth Fund, covering the South East Asia, Oceania and the Greater China regions. Dr. Beh has been involved in technological ventures and was a Senior Research Fellow with a research institute under the umbrella of the Agency for Science, Technology and Research (A*STAR) in Singapore. He holds a Ph.D. in Electrical Engineering from the National University of Singapore and M.A. in Physics, M.S. and B.S. in Electrical Engineering from Washington University in St. Louis, Missouri, U.S.A.
Outlook
With the ongoing global economic uncertainty, the main challenge for FY 2012 will be to increase market share, while building up relationships with domestic clients especially in the Shandong and neighbouring north-eastern provinces where demand is growing. The Group's sales team has been promoting the development of our technology and new products at recent trade fairs held during the first quarter of FY 2012. We continue to see demand in the 2(nd) and 3(rd) tier cities where real estate investments are still expected to grow in FY 2012. Trading to date is on target with revenues reaching RMB 61.0 million for the first four months of 2012 with an order book of RMB 86.0 million as at 30 April 2012.
As an ongoing exercise to regulate and improve the industry, the Shandong government will be rolling out a grading system for solar water heater systems and products. Auhua has been invited to play a key role in setting the standards. The first consultation paper is targeted to be circulated to all the industry players in Shandong by June 2012. Separately, Auhua has also been invited to advise Xi'an City to set up their classification system for solar water heater products. This is in recognition of the Group's technology superiority and commitment to quality. We believe that the rolling out of such standards and grading will further consolidate the industry and bodes positively for Auhua.
This has so far been a landmark year for Auhua, with our successful AIM listing and there are many opportunities for the Company to exploit. The listing is only a start.
The Directors remain optimistic about 2012 despite the world economic turmoil. We should continue to perform fuelled by our sales and marketing expansion, our ready production capacity and the Chinese government initiatives to reduce energy consumption and pollution.
On behalf of the board, I would like to thank everyone who has devoted time and effort to supporting the Company. Their support has ensured that we are able to take the business to the next phase of growth. I would like to extend my thanks to the Board of Directors for their commitment and support, the senior management and operations teams for their dedication, confidence and hard work.
I would also like to take this opportunity to extend our appreciation to our clients, business partners, vendors and investors for their unwavering trust and support.
Tham Wai Mun Raphael
Non-executive Chairman
20 June 2012
Auhua Holdings Group(2)
Consolidated Statement of Comprehensive Income
Year ended Year ended
31 December 31 December
2011 2010
Proforma Proforma
Notes RMB'000 RMB'000
Turnover 168,540 135,570
Cost of sales (90,543) (75,058)
============== ==============
Gross pro t 77,997 60,512
Distribution and selling expenses (12,018) (7,580)
Administrative expenses (8,740) (3,474)
============== ==============
Pro t from operations 57,239 49,458
Other income 505 682
Finance costs (673) (3)
Unrealised foreign exchange
gain 5 -
============== ==============
Pro t before tax 57,076 50,137
Income tax expense 3 (14,788) (12,523)
============== ==============
Profit for the year, attributable
to equity holders of the parent 42,288 37,614
============== ==============
Other comprehensive income
* Exchange differences on translating foreign operation 816 -
Total comprehensive income,
net of tax, attributable to
equity holders if the parent 43,104 37,614
Proforma earnings per share
(RMB)
From continuing operations:
============== ==============
Basic and diluted 9 0.71 0.63
============== ==============
Auhua Holdings Group comprises Auhua Holdings Pte Ltd and its wholly owned subsidiaries Shandong Auhua New Energy Co., Ltd and Weihua Auhua New Energy Co., Ltd. Auhua Holdings Pte Ltd was acquired by the Company on 12 December 2011. The Company's first set of consolidated accounts will be in respect of the six months ended 30 June 2012. As the Company was incorporated only on 21 November 2011 for the purposes of the AIM listing and has no other activities, the results for the year ended 31 December 2011 reflect only Auhua Holdings Group.
Auhua Holdings Group
Proforma Consolidated Statement of Changes in Equity
Reconstruction Retained
Share capital Reserve profits Capital reserve Foreign currency Total equity
translation
reserve
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At 1 January 2010 - 14,200 33,658 2,100 - 49,958
Comprehensive income
Profit for the year - - 37,614 - - 37,614
Total comprehensive
income - - 37,614 - - 37,614
Transaction with
owners
Dividend paid - - (23,000) - - (23,000)
At 31 December 2010 - 14,200 48,272 2,100 - 64,572
============== =============== ========= ================ ================= =============
Comprehensive income
Profit for the year - - 42,288 - - 42,288
Other comprehensive
income
Foreign currency
translation
differences - - - - 816 816
Total comprehensive
income - - 42,288 - 816 43,104
Transaction with
owners
Share issue 12,613 (14,200) - - - (1,587)
Dividend paid - (20,000) - - (20,000)
At 31 December 2011 12,613 - 70,560 2,100 816 86,089
============== =============== ========= ================ ================= =============
Auhua Holdings Group
Consolidated Statement Of Financial Position
As at As at
31 December 31 December
2011 2010
Proforma Proforma
Notes RMB'000 RMB'000
Assets
Non-current assets
Property, plant and equipment 4 42,753 49,112
Prepaid lease payments 15,957 16,091
58,710 65,203
------------- -------------
Current assets
Inventories, at cost 5,035 4,293
Trade and other receivables 38,173 34,241
Amount due from holding company 7,378 -
Cash and cash equivalents 11,936 2,359
62,522 40,893
------------- -------------
Total assets 121,232 106,096
============= =============
Equity and liabilities
Share capital 5 12,613 -
Reconstruction reserve - 14,200
Statutory surplus reserve 6 2,100 2,100
Foreign currency translation reserve 816 -
Retained profits 70,560 48,272
86,089 64,572
Current liabilities
Trade and other payables 22,343 29,562
Short term loans 8,000 8,000
Provision for taxation 4,800 3,962
35,143 41,524
Total equity and liabilities 121,232 106,096
============= =============
Auhua Holdings Group
Consolidated Cash flow statement
Year ended Year ended
31 December 31 December
2011 2010
RMB'000 RMB'000
Proforma Proforma
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year before tax 57,076 50,137
Adjustments for:
Depreciation 3,451 1,773
Amortisation of a land use right 134 -
Disposal of property, plant and equipment 25 -
Allowance for doubtful debts- Trade 1,084 -
Interest expenses 611 -
------------- -------------
Operating cash flows before working
capital changes 62,381 51,910
(Increase)/Decrease in inventories (742) 4,717
(Increase) in trade and other receivables (22,443) (411)
(Decrease) in trade and other payables (3,231) (3,702)
Cash generated from operations 35,965 52,514
Dividends paid (20,000) (23,000)
Interest paid (611) -
Corporate tax paid (12,491) (9,474)
Net cash generated from operating activities 2,863 20,040
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for construction in progress - (29,959)
Payment for land use right - (5,491)
Proceeds from disposal/(purchase) of
property, plant and equipment 2,888 (2,099)
Purchase of property, plant and equipment (5) -
Acquisition of subsidiaries (14,200) -
Net cash (used in) investing activities (11,317) (37,549)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from term loan 8,000 8,000
Repayments of term loans (8,000) (1,107)
Proceeds from share capital 12,613 -
Loans from directors/shareholders 4,602 1,912
Net cash from financing activities 17,215 8,805
------------- -------------
NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS 8,761 (8,704)
Exchange gains on cash and cash equivalents 816 -
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 2,359 11,063
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF
YEAR 11,936 2,359
Auhua Holdings Group
1. General information and principal activities
The Company is the holding company for the Auhua Group, with Auhua Holdings Pte Ltd ("Auhua Holdings") as its intermediate subsidiary. Auhua Holdings owns two subsidiaries, Shandong Auhua New Energy Co. Ltd and Weihai Auhua New Energy Co. Ltd (together the "Auhua Holdings Group"). The principal activities of the Auhua Group are those relating to technology research and development of solar energy to facilitate household energy appliances for sale and services. The geographical focus of its activities is currently principally in the People's Republic of China ("PRC").
The registration number of Auhua Holdings is 201104035E and the address of the registered office is 12 Eu Tong Sen Street, #08-166 Central, Singapore 059819. During the year, the Company, incorporated in Jersey, became the immediate and ultimate holding company of Auhua Holdings.
The financial information set out in this announcement, which does not constitute financial statements of the Auhua Holdings Group but was derived from them. The auditors to Auhua Holdings have reported on the non-statutory financial statements for the year ended 31 December 2011; this report was unqualified.
The financial information set out in this announcement was approved by the Company's board on 20 June 2012.
The directors do not recommend the payment of a final dividend.
2. Significant accounting policies
The financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
The financial information has been prepared and presented in accordance with the accounting policies adopted in the proforma aggregated financial information for the Auhua Trading Group in the AIM Admission document of the Company (which acquired the Auhua Holdings Group on 21 November 2011) except for the following accounting policy:
2.1 Acquisition of Weihai Auhua New Energy Co., Ltd and Shandong Auhua New Energy Co., Ltd
In July and November 2011, Auhua Holdings Pte. Ltd. ("Auhua Holdings") completed the acquisition of Weihai Auhua New Energy Co., Ltd. ("Weihai Auhua") and Shandong Auhua New Energy Co., Ltd ("Shandong Auhua") (together, the "Auhua Holdings Group") respectively for a total purchase consideration of RMB 14,200,000.
Due to the relative values of the companies, the former shareholders, management and advisers of Weihai Auhua and Shandong Auhua maintained control over the enlarged ordinary share capital in Auhua Holdings. Further, the executive management of Weihai Auhua and Shandong Auhua became that of Auhua Holdings. A qualitative and quantitative analysis of these factors leads the Directors to conclude that in this transaction Weihai Auhua and Shandong Auhua have the controlling interest and should be treated as the accounting acquirers in each transaction.
In determining the appropriate accounting treatment for the acquisition, the directors have considered the Application Supplement to IFRS 3, Business Combinations. However, they have concluded that this transaction falls outside of the scope of IFRS 3, since Auhua Holdings, whose activities prior to the acquisition were limited to the management of cash resources, did not constitute a business. It has therefore been determined that the transaction should be accounted for in a manner that is similar to the reverse accounting as described in IFRS 3, but without recognising goodwill.
In accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, in developing an appropriate accounting policy, the directors have considered the pronouncements of other standard-setting bodies and specifically looked to accounting principles generally accepted in the United States of America ("US GAAP") for guidance (FAS 141, Business Combinations) as well as SEC rules. Under US GAAP, in a reverse acquisition, the target companies (Weihai Auhua and Shandong Auhua) are treated as the acquiring company for financial reporting purposes (no purchase accounting adjustments) and the fair value of the acquisitions is recognised, together with adjustments necessary to reflect the net tangible and identifiable intangible assets at their fair value with any remainder assigned to goodwill (full application of purchase accounting).
Under US GAAP, such a transaction is treated as an issuance by the operating entity (in this case, Auhua Holdings). As a result, the cost of the combination is deemed to equal the net monetary assets of the acquiree plus transaction costs. Only costs incurred by the "target" company can be capitalised.
The proforma aggregated financial information of the Auhua Trading Group in the AIM admission document was presented under Standards for Investment Reporting ("SIR") comprising the two underlying trading entities, Weihai Auhua New Energy Co., Ltd and Shandong Auhua New Energy Co., Ltd. However, the basis of presentation applied in these results comprise those of the Auhua Holdings Group and is consistent with the basis of consolidation described above.
3. Taxation
3.1 The major components of the income tax expense are as follows:
Year ended Year ended
31 December 31 December
2011 2010
Proforma Proforma
RMB'000 RMB'000
Current income tax for the year 14,685 12,523
Provision for Auhua Holdings
Group Income Tax 103 -
Income tax expense recognised
in the income statement 14,788 12,523
============ ====================================
Auhua Holdings is subject to a Singapore Tax rate of 17%. As Auhua Holdings has no trading income, the expenses incurred cannot be carried forward as tax losses.
Auhua Holdings Group is subject to a PRC Enterprise Income tax rate of 25%.
3.2 A reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rates is as follows:-
Year ended Year ended
31 December 31 December
2011 2010
Proforma Proforma
RMB'000 RMB'000
Accounting profit before tax 57,076 50,137
Tax at the domestic rates applicable
to profits in the countries where
the Group operates 14,269 12,523
Adjustments:-
- Underprovision in respect of
prior year 187 -
- Non-deductible expenses 18 -
- Others 314 -
Income tax expenses recognised
in the income statement 14,788 12,523
============ ============
No deferred tax assets or liability is recognised, principally as result of the taxable profit for the Auhua Holdings Group equating to accounting profit.
3.3 There was no material unprovided deferred tax as at 31 December 2011 (2010: nil).
4. Property, plant and equipment
Machinery Motor Construction
Proforma Buildings & equipment vehicles Renovation in progress Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
---------- ------------- ------------------ ---------------- ------------- --------
At 1 January
2010 7,109 9,575 - 1,353 8,093 26,130
Additions - 2,065 34 - 29,959 32,058
At 31 December
2010 7,109 11,640 34 1,353 38,052 58,188
Disposals (7,109) - - (1,353) - (8,462)
Transfer
from construction
in progress 22,021 16,031 - - (38,052) -
Additions - 1,512 - - - 1,512
At 31 December
2011 22,021 29,183 34 - - 51,238
========== ============= ================== ================ ============= ========
Accumulated Depreciation
At 1 January
2010 2,279 4,124 - 900 - 7,303
Charge for
the year 318 1,197 1 257 - 1,773
---------- ------------- ------------------ ---------------- ------------- --------
At 31 December
2010 2,597 5,321 1 1,157 - 9,076
Charge for
the year 742 2,574 6 129 - 3,451
Disposals (2,756) - - (1,286) - (4,042)
At 31 December
2011 583 7,895 7 - - 8,485
========== ============= ================== ================ ============= ========
Net Book
Value
At 31 December
2010 4,512 6,319 33 196 38,052 49,112
========== ============= ================== ================ ============= ========
At 31 December
2011 21,438 21,288 27 - - 42,753
========== ============= ================== ================ ============= ========
5. Share capital
31 December 2010
The share capital of Auhua Holdings Group as at 31 December 2010 was nil, as Auhua Holdings was incorporated on 18 February 2011. The group reconstruction, whereby Auhua Holdings acquired Weihai Auhua New Energy Co., Ltd and Shandong Auhua New Energy Co., Ltd in July and November 2011 respectively, gave rise to the reconstruction reserve which represents the difference between (i) the cost of the investment in the subsidiaries and (ii) the share capital and share premium of those subsidiaries on acquisition.
31 December 2011
The share capital of the Auhua Holdings Groupas at 31 December 2011 represents that of Auhua Holdings.
Issued, called up and fully
paid No. of shares RMB'000
Date of incorporation 1 -*
Additional issue during
the period 295,999 12,613
Share split 900,000 -
1,196,000 12,613
============================ ========
*On incorporation, one ordinary share of One Singapore dollar ("S$") was issued for a cash consideration of S$1.
On 18 November 2011, Auhua Holdings Pte Ltd undertook a share split of 100,000 ordinary shares into 1,000,000 ordinary shares.
During the period, 295,999 ordinary shares are issued for cash amounting to S$2,599,999 equivalent to RMB12,612,600 to provide for additional working capital.
Following the Share Swap Agreement on 12 December 2011, a share purchase agreement was entered into whereby the Company agreed to acquire the entire issued share capital of the Auhua Holdings Group in consideration for the issue and allotment and/or transfer of 59.8 million ordinary shares of the Company.
6. Reserves
6.1 Statutory surplus reserve
According to the relevant PRC regulations and the Articles of Association, a company is required to transfer 10% of its profit after income tax to the statutory surplus reserve until the reserve balance reaches 50% of their registered capital. The transfer to this reserve must be made before the distribution of dividends to equity owners. Statutory surplus reserve can be used to make good previous years' losses, if any, and may be converted into paid-in capital in proportion to the existing interests of equity owners, provided that the balance after such conversion is not less than 25% of the registered capital.
7. Related party transactions
a) Related parties are entities with common direct or indirect shareholders and/or previous and/or current directors. Parties are considered to be related if one party has the ability to control the other party in making financial and operating decisions.
Certain of Auhua Holdings Group's transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in these non statutory financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated.
During the financial year, in addition to those disclosed elsewhere in this pro forma aggregated financial information, the following significant transactions took place at terms agreed between the parties:
Year ended Year ended
31 December 2011 31 December 2010
Proforma Proforma
RMB'000 RMB'000
Purchases from former holding
company - (34)
Expenses reimbursements to
directors (832) (154)
Proceed from disposal of office
buildings to former holding
company 4,400 -
Loss on disposal of property,
plant and equipment to a related
party 25 -
Loan to directors/shareholders (10,000) (7,881)
Repayment of loan from directors/shareholders 11,941 12,000
Loan from directors/shareholders 4,730 1,218
Repayment of loan made to directors/shareholders (4,871) (2,233)
Loan from related party - 788
Repayment of loan made to a
related party - (243)
Rental paid to a related party (83) -
Prepayment of rental to a related
party (996) -
b) Key management personnel compensation is analysed as follows:
Year ended Year ended
31 December 2011 31 December 2010
RMB'000 RMB'000
Remuneration 337 135
Other benefits 16 6
---------------- ----------------
353 141
================ ================
Key management personnel are considered to be the previous and/or current directors and their emoluments are included in Note (a) above.
c) Year ended Year ended
31 December 31 December
2011 2010
RMB'000 RMB'000
Payment to Augrains Capital 294 -
Pte Ltd for advisory work
during the period
============ ============
Amount due to Augrains Capital 739 -
Pte Ltd
============ ============
Augrains Capital Pte. Ltd. is controlled by Raphael Tham, a director of Auhua Holdings Pte Ltd as at the balance sheet date.
8. Amount due from holding company
The amount due from Auhua Holdings represents the listing expenses incurred.
9. Proforma earnings per share
The financial information has been prepared as set out in note 2. It is of limited significance to calculate earnings per share based on the historical weighted average number of shares.
Accordingly, a proforma earnings per share has been included based on the relevant number of shares in the Company following the Group reorganisation (whereby the Company acquired the whole of the issued share capital of Auhua Holdings Pte Ltd) but prior to the issue of shares to raise new funds at the time of the AIM listing. The calculation of earnings per share is based on the following earnings and number of shares.
Group - Proforma Year ended Year ended
31 December 31 December
2011 2010
RMB'000 RMB'000
Profit for the year from continuing
operations 42,288 37,614
Proforma average number of shares
(number of shares following reorganisation)
Basic and diluted 59,800,000 59,800,000
Earnings per share (RMB)
Basic and diluted 0.71 0.63
============= =============
Auhua Clean Energy plc
Statement of Comprehensive Income for the period ended 31 December 2011
The statement of comprehensive income of the Company for the period from incorporation on 21 November 2011 to 31 December 2011 is stated as below:-
RMB'000
Total comprehensive income attributable to equity -
owner
--------
Earnings per share
Basic and diluted (RMB -
per share)
--------
Statement of Changes in Equity for the period ended 31 December 2011
Share capital
RMB'000
--------------
As at 21 November 2011 -*
Profit for the period -
Total comprehensive income for the period -
Issue of ordinary shares 12,613
At 31 December 2011 12,613
==============
*Issued share capital was GBP0.02, being two shares of GBP0.01 each.
Auhua Clean Energy plc
Statement of Financial Position as at 31 December 2011
As at
31 December
2011
Notes RMB'000
Assets
Non-current assets
Investment in subsidiary 3 12,613
12,613
------------
Current assets
Trade and other receivables 4,030
4,030
Total assets 16,643
============
Equity and liabilities
Share capital 4 12,613
Accumulated loss -
Total equity 12,613
------------
Current liabilities
Amount due to subsidiary - Auhua Holdings
Pte Ltd 4,030
Total liabilities 4,030
------------
Total equity and liabilities 16,643
============
Auhua Clean Energy plc
Statement of Cashflows for the period ended 31 December 2011
Period ended
31 December
2011
RMB'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the period before tax -
Operating cash flows before working capital changes -
Increase in trade and other receivables (4,030)
Increase in trade and other payables 4,030
Cash generated from operations -
Net cash generated from/(used in) operating activities -
CASH FLOWS FROM INVESTING ACTIVITIES -
Net cash (used in) investing activities -
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share capital -
Net cash from financing activities -
-------------
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS -
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -
-------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD -
=============
Auhua Clean Energy plc
Notes to the financial information
1. General information and principal activities
The principal activity of Auhua Clean Energy Plc (the "Company") is to act as a holding company for a group engaged in technology research and the development of solar energy to facilitate household energy appliances for sale and service.
The Company was incorporated in Jersey, Channel Islands on 21 November 2011 and the registered office is Queensway House, Hilgrove Street, St. Helier, Jersey JE1 1ES, Channel Islands. The Company's shares are listed on the AIM Market of the London Stock Exchange.
The financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and using accounting policies as set out in the AIM Admission document of the Company.
The financial information set out in this announcement, which does not constitute financial statements of the Company but was derived from them. The auditors have reported on the non-statutory financial statements for the period ended 31 December 2011; this report was unqualified.
The financial information set out in this announcement was approved by the board on 20 June 2012.
The directors do not recommend the payment of a final dividend.
2. Operating segments
For the purpose of IFRS 8, the chief operating decision-maker ("CODM"), who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors. The Company acts as a holding company and the Directors therefore consider that the business of the Company comprises of a single activity being a holding company and therefore that only one reportable segment exists.
3. Investments
Period ended
31 December
-------------
2011
RMB'000
As at 21 November 2011 -
Additions (see note 4) 12,613
As at 31 December 2011 12,613
As at 31 December 2011, the Company had the following subsidiaries:
Percentage
of equity
attributable
Date and to Auhua
place of Clean Energy
Name of Subsidiary establishment Plc Principal activities
Auhua Holdings Pte 18 February 100% Holding Company
Ltd 2011
Singapore
Held by Auhua Holdings
Pte Ltd
Shandong Auhua New 21 August 100% Production and
Energy Co., Ltd 2002 sale of solar
PRC water heater
systems
Weihai Auhua New Energy 12 August 100% Production and
Co., Ltd 2008 sale of solar
PRC water heater
systems
4. Share Capital
On 21 November 2011, the Company was incorporated and had an unlimited share capital. On incorporation, the Company issued 2 ordinary shares of GBP0.01 each for a cash consideration of GBP0.02.
Following the Share Swap Agreement on 12 December 2011, a share purchase agreement was entered into whereby the Company agreed to acquire the entire issued share capital of Auhua Holdings Pte Ltd ("Auhua Holdings") in consideration for the issue and allotment and of 59.8 million ordinary shares of the Company. The share purchase agreement was completed on 12 December 2012 and 59,799,998 ordinary shares were issued and allotted on the same date.
Issued, called up and fully paid No. of shares RMB'000
As at 21 November 2011 - Ordinary
shares of 1p each 2 0
Share swap in relation to the acquisition
of Auhua Holdings Group - Ordinary
shares of 2.17 p each on 12 December
2011 59,799,998 12,613
59,800,000 12,613
============================= ========
5. Contingencies
The Company had no material contingent liabilities as at 31 December 2011.
6. Related party transactions
An entity or individual is considered a related party of the Group for the purpose of the nancial statements if:
(i) it possesses the ability (directly or indirectly) to control or exercise signi cant in uence over the operating and nancial decisions of the Group or vice versa; or
(ii) it is subject to common control
Inaddition to related party information disclosedelsewhere in the nancial statements, the followingsigni cant related party transactions took place duringthe year on terms agreed between the parties:
As at
31 December 2011
RMB'000
Auhua Holdings Pte Ltd
Investment in subsidiary 12,613
Amount due to Auhua Holdings (4,030)
6.1 Auhua Holdings Pte Ltd
Auhua Holdings Pte Ltd ("Auhua Holdings") is a Singapore incorporated holding company. On 12 December 2011, the Company entered into a share purchase agreement with the shareholders of Auhua Holdings whereby the Company became the immediate and ultimate holding company of Auhua Holdings.
The amount due to represents payment made by Auhua Holdings, a subsidiary on behalf of the Company. It was incurred for listing expenses and is unsecured, interest free and has no fixed terms of repayment.
7. Subsequent events
7.1 Fee shares
On 27 March 2012, 1,257,445 Ordinary Shares were allotted conditional on Admission to Augrains Capital Pte. Ltd. at 40 pence per share.
7.2 Placing and Subscription Agreements
On 27 March 2012, the Company entered into separate placing and subscription agreements pursuant to which, conditional on Admission, it allotted 2,507,500 Ordinary Shares at 40 pence per share.
7.3 Admission to trade on AIM
63,564,945 Ordinary Shares were admitted to trading on AIM on 2 April 2012.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UKUNRUNANAAR
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