Auhua Clean Energy Plc Final Results and Notice -7-

The Group's interest rate risk arises from interest-bearing financial liabilities that mainly are short-term borrowings arrangement. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.

21.3.1 Interest rate sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to variable interest rate for non-derivative instruments at the balance sheet date. For variable-rate borrowings, the analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year.

A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rate.

 
 Group              As at 31 December 2013      As at 31 December 2012 
                    Change in interest rate     Change in interest rate 
                         +1 %           -1 %         +1 %           -1 % 
                          RMB            RMB          RMB            RMB 
 Cash and banks       427,904       (30,821)      318,098       (42,949) 
 Bank loan            144,500      (144,500)      135,000      (135,000) 
                      572,404      (175,321)      453,098      (177,949) 
                  ===========  =============  ===========  ============= 
 

As at 31 December 2013, if interest rate had been 100 basis points higher/lower and all other variables were held constant, this would increase/decrease the group's profit after tax and retained earnings by approximately RMB 572,404 / (RMB 175,321).

The 100 basis point increase/(decrease) represents management's assessment of a reasonably possible change in interest rates over the period until the next annual balance sheet date.

21.4 Foreign currency risk management

The Group's ultimate holding company is located in Jersey, Channel Island and its monetary assets, liabilities and transactions are principally denominated in the functional currency of respective group entities. However, most of the transactions of the Group are carried out in the PRC where Auhua Holdings Group operates. The Group's sales transactions, all related purchases and loan borrowings transactions are denominated in Renminbi ("RMB").

The Group has no significant exposure to foreign exchange risk as its cash flows and financial assets and liabilities are mainly denominated in Renminbi. The amount to be paid and received in RMB are expected to offset one another, no hedging activity is undertaken. For the financial year, the Group's expenses incurred were in combination of RMB and Singapore Dollar ("SGD").

   21.5   Foreign currency sensitivity 

The Group is facing the following foreign currency exposure:

 
              As at 31 December 2013 
 
 Financial assets          RMB(000's)   S$(000's) 
 Accounts receivables          73,577           - 
 Other receivables              1,322           - 
 Prepayments                   19,385           - 
 Cash and bank balance         48,666           - 
 
 
 Financial liabilities 
 Accounts payables           (11,138)           - 
 Other payables               (2,866)       (346) 
 Short term borrowings        (5,450)           - 
 Accruals                       (233)       (102) 
 Accrued salaries               (735)           - 
 Tax liabilities              (7,905)           - 
 Due to shareholders/ 
  director                    (4,870)       (277) 
 Due to related company             -       (279) 
------------------------  -----------  ---------- 
 Short term exposure          109,753     (1,004) 
------------------------  -----------  ---------- 
 
 
              As at 31 December 2012 
 
 Financial assets          RMB(000's)   S$(000's) 
 Accounts receivables          43,707           - 
 Other receivables             13,882           - 
 Prepayments                    1,010           - 
 Cash and bank balance         40,054           - 
 Due from related 
  company                           -           - 
 
 
 Financial liabilities              -           - 
 Accounts payables            (8,834)           - 
 Other payables               (1,612)       (587) 
 Short term borrowings       (13,500)           - 
 Accruals                           -       (803) 
 Accrued salaries               (672)           - 
 Tax liabilities              (6,449)           - 
 Due to shareholders/ 
  director                    (4,870)       (261) 
 Due to related company             -       (233) 
------------------------  -----------  ---------- 
 Short term exposure           62,716     (1,884) 
------------------------  -----------  ---------- 
 

21.6 Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties. The Group's exposure and the credit ratings of its trading counterparties are monitored by the board of directors to ensure that the aggregate value of transactions is spread amongst approved counterparties.

The Group's principal financial assets are cash and cash equivalents, trade debtors and other accounts receivables. Cash equivalents include amounts held on deposit with financial institutions.

The Group has no significant concentrations of credit risk. Cash is placed with established financial institutions. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.

The group is exposed to credit risk on its trade receivables balances. The board reviews these balances on a regular basis and ensures that appropriate action is taken to maximise cash flows.

   22.     Contingencies 

The Group had no material contingent liabilities as at 31 December 2013 and 31 December 2012.

   23.     Earnings per share 

The calculation of earnings per share is based on the following earnings and number of shares.

 
 Group                                         Year ended          Year ended 
                                         31 December 2013    31 December 2012 
                                                  RMB'000             RMB'000 
 
 
 Profit for the year from continuing 
  operations                                       47,877              44,633 
 
 Weighted average number of 
  ordinary shares in issued (number) 
  - basic                                      65,417,552          62,618,565 
 
 Weighted average number of 
  ordinary shares in issued (number) 
  - diluted                                    66,053,202          63,094,435 
 
 Basic earnings per share (RMB)                      0.73                0.71 
                                       ==================  ================== 
 
 
 Diluted earnings per share 
  (RMB)                        0.73   0.71 
                              =====  ===== 
 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential shares. The Company has one category of dilutive potential ordinary shares: share options.

24. Post Balance Sheet Events

On 30 April the Company signed a letter of offer for a standby facility of up to GBP10 million with Sunmax Global Capital Private Limited.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR EASSNESNLEFF