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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Auhua Clean | LSE:ACE | London | Ordinary Share | JE00B6ZBFF95 | ORD SHS NPV |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMACE
RNS Number : 5773R
Auhua Clean Energy Plc
29 June 2015
AUHUA CLEAN ENERGY PLC
("Auhua" or the "Company")
Final Results and Notice of AGM
29 June 2015: Auhua Clean Energy Plc (AIM: ACE) (the "Company"), the environmental technology group, is pleased to announce its final results for the year ended 31 December 2014.
Financial highlights:
-- Revenues of RMB 248.9 million (GBP 24.6 million) (2013: RMB 250.9 million (GBP 26.1 million))
-- Gross margin of 38.6% (2013: 43.6%) -- EBITDA of RMB 53.4 million (GBP 5.3 million) (2013: RMB 71.8 million (GBP 7.5 million))
-- Profit before tax of RMB 48.2 million (GBP 4.8 million) (2013: RMB 65.8 million (GBP 6.8 million))
-- Cash balances of RMB 47.0 million (GBP4.6 million) (2013: RMB 48.7 million, (GBP 5.1 million))
-- Basic earnings per share of RMB 0.37 (GBP 4 pence) (2013: RMB 0.71 (GBP 8 pence))
-- Net assets up to RMB 252.6 million (GBP 24.9 million) (2013: RMB 191.8 million (GBP 19.9 million))
-- Net assets per share up 22% to RMB 2.82 (GBP 28 pence) (2013: RMB 2.32 (GBP 24 pence))
-- Significant R&D advancements in the solar thermal panel manufacturing and building integration solar thermal technologies (BIST) with Purdue University in the USA.
Post balance sheet events:
-- Entered into the Dubai Green Economy Partnership in May 2015 -- Raised GBP1,724,500 through a placing and subscription, as announced on 19 June 2015
The Company has performed strongly amidst the slower growth in the Chinese economy and the property sector. This is largely because the Chinese government remains committed to the renewable energy sector and, in particular, the promotion of solar technologies in building developments. The Company was recently awarded a significant technology accolade by the Weihai Science and Technology Department for its technology advancements in solar thermal panel efficiencies. Demand in solar thermal projects remains strong among the property developers.
David Sumner, Chairman and Non-Executive Director of Auhua, said: "We are delighted with this sound set of financial results despite price pressures and the tougher market conditions in China. In spite of a challenging economic backdrop in the country, Auhua has had a good year. Our close ties with regulatory authorities, governments and property developers have helped ensure stable growth in sales domestically. We have ambitious domestic and international plans as global demand for solar products continues to thrive and the competitive adoption of clean power becomes more firmly fixed in the minds and actions of countries and governments. We look forward to a promising future ahead."
Chen Anxiang, Chief Executive Officer of Auhua, commented: "Auhua's investments into research and development has significantly helped the Company to develop the innovation needed to maintain a strong competitive advantage against its competitors. The 2014 joint research project between Taiwan Ziolar and Purdue University, USA has resulted in the filing of four Chinese patents and two U.S. patents since July 2014. We expect to form a pilot solar thermal coating production line in the second half of 2015. This technology will fill the gap in the market for innovative thermal solutions in property development."
On 19 June 2015, the Company completed a fundraising of GBP 1,724,500 (before expenses) through a placing and subscription of new Ordinary Shares of no par value of the Company at 4.5 pence per new Ordinary Share. While the Group's operations in China are profitable and cash positive, liquidity in China continues to be tight and the working capital requirements to operate the business have increased year on year. As such, the Company raised monies from the market to fund its capital expansion and provide working capital for its overseas expansion.
The Company will hold its Annual General Meeting at 11am (BST) on Wednesday 22 July 2015 at the offices of Grant Thornton UK LLP at 30 Finsbury Square, London, EC2P 2YU. Notice of the Annual General Meeting will be sent to shareholders tomorrow, 30 June 2015.
The financial information in this announcement is derived from the Company's audited financial statements for the year ended 31 December 2014 which are available on the Company's website www.auhuacleanenergy.com.
Copies of the Company's Annual Report and Accounts for the year ended 31 December 2014 will be sent to shareholders tomorrow, 30 June 2015 and will be available on the Company's website www.auhuacleanenergy.com.
All RMB amounts have been translated using the below exchange rates:
RMB 1: GBP 0.09870 (average exchange rate for 2014)
RMB 1: GBP 0.10396 (average exchange rate for 2013)
--ends---
Media Enquiries
Brunswick Group auhua@brunswickgroup.com ---------------- -------------------------
Further information
Auhua Clean David Sumner, non-executive davidjsumner@auhuacleanenergy.com Energy plc Chairman -------------------- ----------------------------- ---------------------------------- Grant Thornton Philip Secrett / Maureen UK LLP (Nominated Tai / Adviser) Jamie Barklem +44 (0)20 7383 5100 -------------------- ----------------------------- ---------------------------------- WH Ireland Tim Feather +44 (0) 207 220 1666 (Broker) Tim.feather@wh-ireland.co.uk -------------------- ----------------------------- ----------------------------------
About Auhua:
Auhua Clean Energy (www.auhuacleanenergy.com) 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 thermal solutions. In particular, the Group is focused on the manufacture and sale of split-unit solar water heating systems.
Auhua Clean Energy operates through its wholly owned subsidiaries Shandong Auhua New Energy Co., Ltd, Weihua Auhua New Energy Co., Ltd., and Taiwan Ziolar Technology Co. Ltd, of which Auhua Holdings Pte Ltd is the intermediate holding company.
CHAIRMAN'S STATEMENT
On behalf of the Board of Directors (the "Board"), I am pleased to deliver our results for the year ended 31 December 2014.
The Company has continued to make good progress in our product development and penetration into new markets. We did not proceed with a fund raise in 2014, and as such were unable to increase the paid-up share capital of our Chinese subsidiaries or increase our production capacity. This restricted our growth and resulted in the Company maintaining its production output. Amidst price pressures in China and our strategic move towards larger customers, we suffered a small dip in revenues and gross margins. The Company has however made significant technological advances during 2014 and, following a key strategic acquisition, is strongly positioned to enter the solar energy market on a global scale.
Financial Review
Group revenue was RMB 248.9 million (GBP 24.6 million) in FY14 compared to RMB 250.9 million (GBP 26.1 million) in FY13. The Group had received considerable orders in the fourth quarter of 2014, but was unable to fulfil them all since it was already operating at full production capacity. Some of the orders were also delayed due to the poor property climate in China. Meanwhile, stainless steel prices increased in the second half of 2014, adding to our cost of goods, and price pressures from the larger customers caused our gross margins to dip to 38.6 per cent and gross profit of RMB 96.1 million (GBP 9.5 million) compared to 2013 where gross profit was RMB 109.4 million (GBP 11.4 million).
Administrative expenses increased significantly to RMB 27.2 million (GBP 2.7 million) during the period (2013: RMB 18.2 million (GBP 1.9 million)). The higher costs in 2014 were largely due to the operating overheads of Taiwan Ziolar and the increased training expenses in China to build up our sales and marketing teams. Selling and distribution costs fell to RMB 19.5 million (GBP 1.9 million) in 2014 compared to RMB 24.1 million (GBP 2.5 million) in 2013.
The Group also made several new adjustments this year, including an impairment of obsolete equipment of RMB 1 million (GBP 0.1 million), compared with nil in 2013, and amortisation of the intangibles derived from its acquisition of Taiwan Ziolar of RMB 1.0 million (GBP 0.1 million).
As a result of the lower gross profit margins and the higher administrative overheads, impairments and amortisations, profit before tax dropped by 27 per cent to RMB 48.2 million (GBP 4.8 million) (2013: RMB 65.8 million (GBP 6.8 million)) and net profit after tax from RMB 47.9 million (GBP 5.0 million) to RMB 32.5 million (GBP 3.2 million) in 2014. The Group's EBITDA dropped 26% to RMB 53.4 million (GBP 5.3 million, (2013: RMB 71.8 million (GBP 7.5 million)).
Fixed assets of the Group increased to RMB122.0 million (GBP 12.0 million) in 2014 compared to RMB 82.5 million (GBP 8.6 million) in 2013 largely due to the increase in construction in progress and the intangibles realised on the acquisition of Taiwan Ziolar, which completed in May 2014. Trade receivables increased to RMB90.9 million (GBP 9.0 million) from RMB76.0 million (GBP 7.9 million) as customers delayed payments and demanded longer credit terms. These customers are generally mid to large sized property developers and have a very small risk of bad debt. However, the Group has continued to provided RMB 2.5 million (GBP 0.2 million) in bad debt provisions for FYE2014, as was also provided in 2013.
As at 31 December 2014, total bank loans dropped to RMB 9.0 million (GBP 0.9 million) from RMB 14.5 million (GBP 1.5 million) and cash and cash equivalents maintained at RMB 47.0 million (GBP 4.6 million) as at 31 December 2014 (2013: RMB 48.7 million (GBP 5.1 million)).
Overall, net asset per share increased by 22 per cent from RMB 2.32 (GBP 0.24) in 2013 to RMB 2.82 (GBP 0.28) in 2014.
All RMB amounts have been translated using the below exchange rates:
RMB 1: GBP 0.09870 (average exchange rate for 2014)
RMB 1: GBP 0.10396 (average exchange rate for 2013)
Operational Review
Auhua continued to make good inroads into the mid to large property developers. This included the securing of an agreement with a subsidiary of Green Land Group to supply 1,570 units of solar thermal water heaters. Green Land Group was ranked No. 268 among the Fortune Global 500 companies in 2014 and one of China's largest property developer groups. The Group would have been in a stronger position to secure similar projects if not for the limited production capacity and the small paid up capital of its Chinese subsidiaries. The Group is already operating at full capacity and because it has taken longer than initially expected to raise capital from the market, the Group has therefore had to use its own internal funds to finance its production expansion. Since these funds were sourced in China the Group was unable to increase the paid-up capital of its Chinese subsidiaries since the fund injection needed to come from overseas. Nevertheless, the Group continued to make investment in sales, marketing and training in preparation for the Group's future expansion.
The Group is also looking to grow its overseas business and has made significant progress in Dubai. It has entered into the Dubai Green Economy Partnership ("Dubai GEP"), a government-backed initiative led by His Highness Sheikh Hamdan bin Mohammed bin Rashid al Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council and has been selected as one of the only solar thermal water heater providers under the programme.
The Company's ongoing strategy is to focus on research and development and innovation and to ensure it remains the technological leader in energy saving split-unit solar water heaters. In August 2014, the Group signed a joint development programme with Lyles School of Civil Engineering, Purdue University to enhance Auhua's existing solar thermal technologies by further developing its advanced composite material and proprietary coating technologies. These innovations will aim to achieve breakthrough performance in a number of ways, including system efficiency, structural strength, safety, durability, building lighting, and thermal management, and advance the Building Integrated Solar Thermal (BIST) applications of the design. In November 2014, Weihai Auhua New Energy Co Ltd, one of the Company's subsidiaries, was awarded the status of "Shandong Provincial Enterprise Technical Center". Conferred by the Shandong Economic and Information Technology Committee, the award is only made to companies with certain competitive advantages in terms of technology and operating results over its competitors in the same industry and with strong research and development capability. To date, the Group has already accumulated over forty patents under its Chinese subsidiaries with another five patents pending, and one patent has now been granted in China and the USA from its Taiwan Ziolar subsidiary.
Outlook
China's growth continues to look challenging but there are tangible signs of recovery in the property sector. Liquidity remains tight with the property developers and this will filter down to the building contractors and suppliers like ourselves. We believe the Chinese property market will recover. In the meantime, the progress we are making in Dubai will bring an alternative growth market and a diversification of our market risks. We will continue to be selective with our customers, manage our working capital, look to build production capacity for future growth and to invest in and nurture our technologies.
2014 has marked a consolidation year for the Company from a commercial perspective and a significant milestone with our technology development. It affirms our commitment to growing a world-class, renewable and profitable technology company. I would like to thank our staff for their continued efforts in ensuring Auhua remains at the forefront of solar thermal innovations and lastly, I would also like to thank all our partners, shareholders, customers, business associates and suppliers for their continued support over the year.
David Sumner
Non-executive Chairman
29 June 2015
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2014
Year ended Year ended 31 December 31 December 2014 2013 30 September 2011 Notes RMB'000 RMB'000 =========================== ============== Revenue 4 248,865 250,854 Cost of sales (152,794) (141,419) =========================== ============== Gross pro t 96,071 109,435 Distribution and selling expenses (19,516) (24,080) Administrative expenses (27,206) (18,188) =========================== ============== Pro t from operations 7 49,349 67,167 Other income 34 363 Finance costs (1,145) (1,601) Foreign exchange loss (20) (161) =========================== ============== Pro t before tax 48,218 65,768 Income tax expense (15,688) (17,891) =========================== ============== Profit for the year, attributable to equity holders of the parent parent 32,530 47,877
Other comprehensive income
* Exchange differences on translating foreign operation 580 505 Total comprehensive income, net of tax, attributable to equity holders of the parent 33,110 48,382 Earnings per share (RMB) From continuing operations: ----------------------- ----------------- * Basic (note 24) 0.37 0.73 ----------------------- ----------------- * Diluted (note 24) 0.37 0.73 ---------------------- -------
Consolidated Statement Of Financial Position
For the year ended 31 December 2014
As at As at 31 December 31 December 2014 2013 Notes RMB'000 RMB'000 Assets Non-current assets Property, plant and equipment 8 77,386 67,145 Prepaid lease payments 15,072 15,340 Intangible assets 9 29,556 - 122,014 82,485 ------------- -------------- Current assets Inventories 11,208 6,321 Trade and other receivables 10 124,666 94,414 Cash and cash equivalents 46,998 48,666 182,872 149,401 Total assets 304,886 231,886 ============= ============== Equity and liabilities Stated capital 11 53,016 25,239 Share based payment reserve 257 257 Statutory surplus reserve 2,100 2,100 Foreign currency translation reserve 1,670 1,090 Retained profits 195,600 163,070 252,643 191,756 Current liabilities Trade and other payables 12 30,044 17,775 Short term loans 8,411 5,450 Provision for taxation 4,788 7,905 43,243 31,130 Non-current liabilities Long term loans 9,000 9,000 9,000 9,000 Total equity and liabilities 304,886 231,886 ============= ==============
Consolidated Cash Flow Statement
For year ended 31 December 2014
Year ended Year ended 31 December 31 December 2014 2013 RMB'000 RMB'000 CASH FLOWS FROM OPERATING ACTIVITIES Profit for the year before tax 48,218 65,768 Adjustments for: Depreciation 4,808 4,148 Amortisation 1,156 322 Disposal of property, plant and equipment - (3) Allowance for doubtful debts- Trade - 986 Interest expenses 1,145 1,568 ------------ ------------ Operating cash flows before working capital changes 55,327 72,789 Decrease/(increase) in inventories (4,887) (2,694) (Increase) in trade and other receivables (49,576) (36,801) Increase/(decrease) in trade and other payables 23,798 (2,693) Cash generated from operations 24,661 30,600 Interest paid (1,145) (1,568) Corporate tax paid (18,805) (16,435) Net cash generated from operating activities 4,712 12,597 CASH FLOWS FROM INVESTING ACTIVITIES Payment for construction in progress (15,049) (7,498) Proceeds from disposal of property, plant and equipment - 23 Purchase of property, plant and equipment - (4,782) Net cash (used in) investing activities (15,049) (12,257) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from term loan 11,143 5,500 Repayments of term loans (5,450) (4,550) Proceeds from the issue of shares - 12,119 (Repayment of loans) /loans from directors & shareholders 2,694 (5,454) Loans from related parties 236 151 Net cash from financing activities 8,623 7,766 ------------ ------------ NET INCREASE IN CASH AND CASH EQUIVALENTS (1,714) 8,106 Exchange gains on cash and cash equivalents 46 505 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 48,666 40,054 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF YEAR 46,998 48,666 ------------ ------------
Consolidated Statement of Changes in Equity
Statutory Foreign currency Stated Retained surplus translation Share based capital profits reserve reserve reserve Total equity RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 At 1 January 2013 13,120 115,193 2,100 585 257 131,255 Transaction with owners Share issue 12,119 - - - - 12,119 ================== ===================== ======================== ============================= ================== ======================= 12,119 - - - - 12,119 Comprehensive income Profit for the year - 47,877 - - - 47,877 Other comprehensive income Foreign currency translation differences - - - 505 - 505 ================== ===================== ======================== ============================= ================== ======================= Total comprehensive income - 47,877 - 505 - 48,382 ------------------ --------------------- ------------------------ ----------------------------- ------------------ ----------------------- At 31 December 2013 25,239 163,070 2,100 1,090 257 191,756 Transaction with owners Share issue 27,777 - - - - 27,777 ================== ===================== ======================== ============================= ================== ======================= 27,777 - - - - 27,777 Comprehensive income Profit for the year - 32,530 - - - 32,530 Other comprehensive income Foreign currency translation differences - - - 580 - 580 ================== ===================== ======================== ============================= ================== ======================= Total comprehensive income - 32,530 - 580 - 33,110 At 31 December 2014 53,016 195,600 2,100 1,670 257 252,643 ================== ===================== ======================== ============================= ================== =======================
Material Notes to the financial statements
1. General information and principal activities
The principal activities of Auhua Clean Energy Plc (the "Company" or "Auhua") and its subsidiaries (the "Group") include technology research and the development and production and sale of solar-powered water heater systems.
Auhua, a public limited company, is the Group's ultimate parent company. It was incorporated on 21 November 2011 in Jersey, Channel Islands and its registered office address 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 principal subsidiary of Auhua is Auhua Holdings Pte Ltd ("Auhua Holdings"), the holding company for the Auhua Trading Group (together, "the Auhua Holdings Group"). The Auhua Trading Group is made up of Shandong Auhua New Energy Co., Ltd, Weihai Auhua New Energy Co., Ltd, and Taiwan Ziolar Technology Co. Ltd.
2. Significant accounting policies
2.1 Basis of preparation
The Group prepares its financial statements in accordance with applicable International Financial Reporting Standards (IFRS) and interpretations issued by the International Accounting Standards Board as adopted by the European Union.
The Directors have considered those standards and interpretations, which have not been applied in the Financial Statements but are relevant to the Group's operations, that are in issue but not yet effective and do not consider that any will have a material impact on the future results of the Group. The Company has not presented a statement of cashflows as no bank account is maintained by the Company.
2.2 Subsidiaries
As at 31 December 2014, the Company had the following subsidiaries:
Name of Subsidiary Date and Percentage Principal place of of equity activities establishment attributable to Auhua Clean Energy Plc Auhua Holdings 18 February 100% Holding Company Pte Ltd 2011 Singapore Held by Auhua Holdings Pte Ltd 21 August 100% R&D and production Shandong Auhua 2002 and sale New Energy PRC of solar-powered Co. Ltd water heater system 100% 12 August R&D and production Weihai Auhua 2008 and sale New Energy PRC of solar-powered Co. Ltd water heater 100% system 26 April R&D and production Taiwan Ziolar 2013 and sale Technology Taiwan of solar Co. Ltd. thermal panels
2.3 Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the net book amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If such an indication of impairment is identified, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows thatare independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. In determining fair value less costs to sell, an appropriate valuation model is used.
If the recoverable amount is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
2.4 Trade receivables
Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.
2.5 Key assumptions and sources of estimation uncertainty
The preparation of nancial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the nancial statements and the reported amounts of expenses during the reporting period.
Although these estimates are based on management's best knowledge of the amount, event or actions, results ultimately may differ from those estimates. The Directors have reviewed the accounting policies set out above and consider them to be the most appropriate to the Group's business activities.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by de nition, seldom equal the related actual results. The estimates and assumptions that have a signi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next nancial year are discussed below:
2.5.1 Going concern
The preparation of financial statements requires an assessment on the validity of the going concern assumption. The validity of the going concern assumption is dependent on finance being available for the continuing working capital requirements of the Group, including the Company. The Directors have reviewed forecasts and budgets for the coming year, which have been drawn up with appropriate regard for the current economic environment and the particular industry in which the Group operates. These were prepared with reference to historical and current industry knowledge, taking future strategy of the Group into account. The existing operations have been generating funds to meet short-term operating cash requirements. Depending on its ability to raise further capital, it is within the Directors' ability to control the pace of any capital expenditure required.
The Directors consider that the trading subsidiaries in PRC are profitable and cashflow generative. They have adequate resources and committed borrowing facilities to continue in operational existence for the foreseeable future. The entity in Taiwan has been supported by the Company through shareholder loans and, subsequent to the year end, as detailed in note 21 to the financial statements, through a placing of GBP1.72 million (RMB17.2 million). . Accordingly, the Board believes it is appropriate to adopt the going concern basis in the preparation of the financial statements.
2.5.2 Valuation of intangible assets acquired
The intellectual property assets were acquired through the business combination outlined in note 6. The intellectual property is amortised over ten years. The determination of the fair value of assets and liabilities including goodwill arising on the acquisition of businesses, the acquisition of intellectual property, whether arising from separate purchases or from the acquisition as part of business combinations, and development expenditure which is expected to generate future economic benefits, are based, to a considerable extent, on management's judgement. The fair value of these assets is determined by discounting estimated future net cash flows generated by the asset where no active market for the assets exists. The use of different assumptions for the expectations of future cash flows and the discount rate would change the valuation of the intangible assets.
Allocation of the purchase price affects the results of the Group as finite lived intangible assets are amortised, whereas indefinite lived intangible assets, including goodwill, are not amortised and could result in differing amortisation charges based on the allocation to indefinite lived and finite lived intangible assets. The useful life used to amortise intangible assets relates to the expected future performance of the assets acquired and management's estimate of the period over which economic benefit will be derived from the asset. The estimated useful life principally reflects management's view of the average economic life of each asset and is assessed by reference to historical data and future expectations. Any reduction in the estimated useful life would lead to an increase in the amortisation charge.
Goodwill also arose through the business combination outlined in note 6. The Group tests goodwill recognised through business combinations annually for impairment using the method outlined above.
2.6 Key assumptions and sources of estimation uncertainty (continued)
The Group also uses the following estimates and assumptions that do not have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year. These are:
2.6.1 Allowance for trade and other receivables
Management reviews its loans and receivables for objective evidence of impairment at least quarterly. Significant financial difficulties of the debtor, the probability that the debtor will enter bankruptcy, and default or significant delay in payments are considered objective evidence that a receivable is impaired. In determining this, management makes judgment as to whether there is observable data indicating that there has been a significant change in the payment ability of the debtor, or whether there have been significant changes with adverse effect in the technological, market, economic or legal environment in which the debtor operates in.
Where there is objective evidence of impairment, management makes judgment as to whether impairment in value should be recorded in the income statement. In determining this, management uses estimates based on historical loss experience for assets with similar credit risk characteristics. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between the estimated loss and actual loss experience.
The allowance policy for doubtful debts of the Group is based on the ageing analysis and management's ongoing evaluation of the recoverability of the outstanding receivables. A considerable amount of judgment is required in assessing the ultimate realisation of these receivables, including the assessment of the creditworthiness and the past collection history of each customer. If the financial conditions of these customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
3 Capital risk management
The Group defines capital as the total equity of the Group. The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, to maintain a strong credit rating and healthy capital ratios in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.
The capital structure of the Group consists of equity attributable to equity holders as disclosed in the statement of financial position. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the capital to shareholders or issue new shares. Changes were made in the period as disclosed in the statement of changes in equity. The Group monitors capital using a gearing ratio and debt to equity ratio:
3.1 Gearing ratio
The gearing ratio is defined as and calculated by the Group as total of interest-bearing borrowings to the owners' equity. Equity includes equity attributable to the equity holders of the Group. During the year ended 31 December 2014, the Group's strategy was to maintain the gearing ratio at a moderate level in order to secure access to finance at a reasonable cost. The gearing ratios as at the financial position dates were as follows:
Group As at As at 31 December 31 December 2014 2013 Total interest bearing borrowings RMB'000 RMB'000 Short term loan 8,411 5,450 Long term loan 9,000 9,000 17,411 14,450 ============= ============= Total equity 252,643 191,756 ============= ============= Gearing ratio (%) 7% 8% ============= ============= 3.2 Debt to equity ratio
The debt to equity ratio is defined and calculated by the Group as total debt (total liabilities) to the owner's equity as at 31 December 2014 as follows:
Group As at As at 31 December 31 December 2014 2013 RMB'000 RMB'000 Total debts 52,243 40,130 ------------- ------------- Total equity 252,643 191,756 ------------- ------------- Debt to equity ratio (%) 21% 21% ============= ============= 4. Revenue Group As at As at 31 December 31 December 2014 2013 RMB'000 RMB'000 Sale of goods 248,865 250,854 ============= ============= 5. 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 Group is engaged in technology, R&D and the production and sale of solar-powered water heater systems. The Group's revenue and profit before taxation were all derived from its principal activity.
Revenues from all periods were derived from external customers based in the PRC. The Group's operations are principally based in the PRC and its assets and liabilities related to this single business segment.
6. Investments Company As at As at 31 December 31 December 2014 2013 RMB'000 RMB'000 Investments in subsidiaries * Auhua Holdings Pte Ltd 12,613 12,613 27,777 - * Taiwan Ziolar Technology Co. Ltd ------------- ------------- 40,390 12,613
The Company completed the acquisition of Taiwan Ziolar Technology Co. Ltd on 23 May 2014 for a consideration of USD 4.5 million through the issuance of 6,944,400 ordinary shares at 40 pence per Auhua Share.
Acquisition of Taiwan Ziolar Technology Co. Ltd
On 23 May 2014, the Group acquired 100% of the share capital of Taiwan Ziolar Technology Co. Ltd, a company based in Taiwan, in exchange for the Group's shares. Taiwan Ziolar Technology Co. Ltd was acquired to enable the Group to significantly enhance its solar thermal panel technology.
At the time of authorising these financial statements for issuance, the Group was still in the process of finalising the valuation of certain assets and liabilities acquired. Any changes to the amounts disclosed below, arising from finalisation of these valuations, will be reflected in the Group's next set of financial statements.
Details of the purchase consideration, net assets acquired and goodwill are as follows
RMB'000 Purchase consideration * 6,944,400 Ordinary Shares at 40 pence 27,777 Fair value of identifiable net assets Cash 214 Intellectual property 24,316 Other payables (2,881) Total identifiable net assets at fair value 21,649 Goodwill arising on acquisition (note 9) 6,128
The goodwill is primarily attributable to expected synergies arising from the acquisition, which is not separately recognised. From the date of acquisition, Taiwan Ziolar Technology Group contributed nil revenue and a loss of RMB 2,674k to profit before tax from the operations of the Group.
7. Profit from operations
Profit from operations in the period under review has been arrived after charging the following amounts:
Year ended Year ended 31 December 31 December 2014 2013 RMB'000 RMB'000 Inventory recognised as expense 152,794 141,419 Foreign exchange (profit)/loss 20 161 Amortisation of intangible assets 1,156 322 Depreciation of property, plant and equipment included in: - Cost of goods sold 2,957 3,595 - Operating expenses 851 553 ------------ 3,808 4,148 ============ ============ 8. Property, plant and equipment Machinery Motor Construction Cost Buildings & equipment vehicles in progress Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 ---------- ------------- ---------- ------------- -------- At 1 January 2012 22,021 29,183 34 - 51,238 Disposals - (500) - - (500) Additions 6,901 2,469 - 10,816 20,186 ---------- ------------- ---------- ------------- -------- At 31 December 2012 28,922 31,152 34 10,816 70,924 Disposals - (23) - - (23) Additions - 4,782 - 7,498 12,280 At 31 December 2013 28,922 35,911 34 18,314 83,181 Disposals - - - - - Additions - - - 15,049 15,049 ---------- ------------- ---------- ------------- -------- At 31 December 2014 28,922 35,911 34 33,363 98,230 ========== ============= ========== ============= ======== Accumulated Depreciation At 1 January 2012 583 7,895 7 - 8,485 Charge for the year 726 3,121 6 - 3,853 Disposals - (447) - - (447) ---------- ------------- ---------- ------------- -------- At 31 December 2012 1,309 10,569 13 - 11,891 Charge for the year 940 3,202 6 - 4,148 Disposals - (3) - - (3) At 31 December 2013 2,249 13,768 19 - 16,036 Charge for the year 940 2,862 6 - 3,808 Provision for diminution - 1,000 - - 1,000 Disposals - - - - - ---------- ------------- ---------- ------------- -------- At 31 December 2014 3,189 17,630 25 - 20,844 ========== ============= ========== ============= ======== Net book value At 31 December 2013 26,673 22,143 15 18,314 67,145 ========== ============= ========== ============= ======== At 31 December 2014 25,733 18,281 9 33,363 77,386 ========== ============= ========== ============= ======== 9. Intangibles Intellectual Cost property Goodwill Total RMB'000 RMB'000 RMB'000 ------------------- ------------- --------- -------- At 1 January 2014 - - - Additions 24,316 6,128 30,444 ------------------- ------------- --------- -------- At 31 December 2014 24,316 6,128 30,444 ------------------- ------------- --------- -------- Amortisation At 1 January 2014 - - - Charge for the year 888 - 888 ------------------- ------------- --------- -------- At 31 December 2014 888 - 888 ------------------- ------------- --------- -------- Net book value At 31 December 2013 - - - ------------------- ------------- --------- -------- At 31 December 2014 23,428 6,128 29,556 ------------------- ------------- --------- --------
Acquisition during the year
The intellectual property of RMB16.6 million was acquired through the business combination outlined in note 6. The intellectual property is amortised over the expected life of the asset.
Goodwill
The recoverable amount of goodwill of RMB6.1 million at 31 December 2014 is determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering a five year period. Cash flow projections beyond the five year timeframe are extrapolated by applying a flat growth rate in perpetuity. The pre-tax discount rate applied to the cash flow projections is 11%. As a result of the analysis, management did not identify any impairment to the goodwill.
10. Trade and other receivables 31 December 31 December 2014 2013 RMB'000 RMB'000 Trade receivables 90,696 76,030 Less: Allowance for doubtful debts (2,453) (2,453) ------------ ------------ 88,243 73,577 Other receivables 692 822 ------------ 88,935 74,399 Deposits - 500 Prepayments 35,731 19,515 ------------ Total trade and other receivables 124,666 94,414 ============ ============
There are no material differences between the fair value of trade and other receivables and their carrying value at the year end.
Receivables of RMB 90,696,000 (2013: RMB 76,030,000) were past due but not impaired by the year end. The ageing analysis of these receivables at the year end is as follows:
31 December 31 December 2014 2013 RMB'000 RMB'000 Up to 3 months old 44,816 42,237 3-6 months old 15,255 13,181 Over 6 months old 30,625 20,612 ------------ ------------ 90,696 76,030
Management have assessed the recoverability of debtors, which includes consideration of amounts settled post year end and based on their assessment consider that the amounts above are recoverable.
The company trade and receivables balance relates to amounts due from subsidiary companies. This was the same for the prior year amounts.
11. Stated capital Issued, called up and fully paid No. of shares RMB'000 As at 1 January 2014 82,527,845 25,239 Ordinary shares in relation to the acquisition of Taiwan Ziolar Technology Co Ltd ("Taiwan Ziolar") on 23 May 2014 6,944,400 27,777 At 31 December 2014 89,472,245 53,016 ============== ======== 12. Trade and other payables 31 December 31 December 2014 2013 RMB'000 RMB'000 Trade payables 14,509 11,138 Other payables * Directors 3,491 747 * Third parties/Deposits received/Advance receipts 9,361 2,894 Accruals 543 924 Related parties 1,573 1,337 Provision for staff costs 566 735 ------------ ------------ Total trade and other payables 30,043 17,775 ============ ============ All amounts included in trade and other payables are non-interest bearing and are not secured on the assets of the Group. The Directors consider that the carrying amount of trade and other payables approximates their fair value. All trade payables are less than 30 days overdue. 13. 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 Group's transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in the financial statements.
The balances are unsecured, interest-free and repayable on demand unless otherwise stated.
Year ended Year ended 31 December 31 December 2014 2013 RMB'000 RMB'000 Director- Chen Anxiang Shareholder loan 50 50 Director- Tham Wai Mun Raphael Shareholder loan 2,352 697 Director- David Sumner Shareholder loan 1,089 -
Tham Wai Mun Raphael provided additional loan finance of RMB1.65 million during the year. David Sumner provided additional loan finance of RMB1.09 million during the year.
b) Key management personnel compensation is analysed as follows:
Year ended Year ended 31 December 31 December 2014 2013 RMB'000 RMB'000 Short term benefits Remuneration 1,585 1,797 Other benefits 14 37 ----------- ----------- 1,599 1,834 =========== ===========
Key management personnel above refer to the executive directors.
c) Augrains Capital Pte Ltd
Year ended Year ended 31 December 31 December 2014 2013 RMB'000 RMB'000 Invoices raised for advisory 236 - work during the period Payments for advisory work during the period - 134 ============ ============ Amount due to Augrains Capital Pte Ltd 1,573 1,337 ============ ============
Augrains Capital Pte. Ltd. is controlled by Tham Wai Mun Raphael, a director of the Group as at the balance sheet date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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