Share Name Share Symbol Market Type Share ISIN Share Description
China New Energy Limited LSE:CNEL London Ordinary Share JE00B3RWLF12 ORD 0.025P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 3.05 2.90 3.20 3.05 3.05 3.05 1,234,294 08:00:03
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Alternative Energy 2,850.2 537.0 114.0 0.0 15

China New Energy Ltd Half-year Report

27/09/2019 3:45pm

UK Regulatory (RNS & others)


China New Energy (LSE:CNEL)
Historical Stock Chart

2 Months : From Sep 2019 to Nov 2019

Click Here for more China New Energy Charts.

TIDMCNEL

RNS Number : 0153O

China New Energy Ltd

27 September 2019

27 September 2019

China New Energy Limited ("China New Energy", "CNE", "the Company" or together with its subsidiaries "the Group")

Half-yearly report for the six months to 30 June 2019

The Board of CNE (AIM: CNEL), the AIM quoted engineering and technology solutions provider to the bioenergy sector, presents its unaudited interim results for the six months ended 30 June 2019.

Financial Highlights

-- Revenue of RMB 163.9m (GBP18.5m) (H1 2018: RMB 69.1m (GBP7.8m)), which represents a 137.3% increase over the same period last year

   --      Gross profit of RMB 49.9m (GBP5.6m) (H1 2018: RMB 16.1m (GBP1.8m)) 
   --      Net profit of RMB 21.4m (GBP2.4m) (H1 2018: RMB 13.5m (GBP1.5m)) 
   --      Basic earnings per share of RMB 0.048 (0.54p) (H1 2018 RMB 0.030 (0.34p)) 

RMB 8.8692: GBP GBP1 used as an indicative exchange rate on 20 Sept 2019.

Yu Weijun, Chairman, commented: "I am very pleased to report the Company's remarkably strong interim results, which are a result of completing contracts in the existing order book rolled over from 2018 and new contracts won from companies such as Heilongjiang Hongzhan Bioenergy Co., Ltd and Inner Mongolia Zhongneng Biotechnology Company Limited.

The implementation of the People's Republic of China ("PRC") 13(th) Five Year Plan for Renewable Energy Development continues to drive the ethanol fuel industry. We believe that our advanced technologies and research and development capabilities have given us a competitive edge and allowed us to continue to secure contracts from customers through our provision of ethanol production system technology integrated services in the PRC.

I am very confident about the outlook for the remainder of 2019 and into 2020. During the period, a listing application of the Company, including an application proof of the prospectus (the "Application Proof") of the Company, has been submitted to the Main Board of the Hong Kong Stock Exchange (the "HKEx") on 21 June 2019. The Company's fundamentals and outlook have substantially grown over the last three years, but this is not reflected in the Company's share price on AIM. It is expected that the proposed listing on the HKEx will deliver a better valuation for shareholders and provide the Company with the ability to gain more opportunity to raise capital to expand the business."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information, please contact:

 
 China New Energy Limited              www.chinanewenergy.co.uk 
 Richard Bennett                       Tel: +44 (0)20 7148 3148 or rbennett@zkty.com.cn 
 Ivy Xu                                Tel: +86 (0)20 8705 9371 or xuhj@zkty.com.cn 
 
 Cairn Financial Advisers LLP (NOMAD 
  and Broker) 
 Jo Turner / Sandy Jamieson            Tel: +44 (0)20 7213 0880 
 

Chairman's Statement

I am pleased to report that the Group recorded remarkably strong interim results for the six months ended 30 June 2019 and is on track to record its fourth annual consecutive profit after tax ("net profit").

Financial Review

Revenue for the first six months of the year has substantially grown to RMB 163.9 million (H1 2018: RMB 69.1 million), an increase of approximately 137.3% which was due to fulfilling orders rolled over from 2018 and new contracts won during the period mainly due to the continuous growth in demand for ethanol production systems and the ability in securing ethanol fuel projects and alcoholic beverage upgrade projects.

Our net profit increased from RMB 13.5 million (c. GBP1.6 million) for the period H1 2018 to RMB 21.4 million (c. GBP2.4 million) for the period H1 2019, representing an increase of 58.5%.

We have achieved a stable and steady performance in our business operations which was primarily due to the increased market demand as well as the favourable policies introduced by the PRC government, such as: i.) The 13(th) Five Year Plan for Renewable Energy Development clearly demonstrated the intention of the PRC government to vigorously develop the ethanol fuel industry. In September 2017, the PRC government announced a new nationwide ethanol mandate (NEA) that was designated to expand the mandatory use of E10 fuel (gasoline containing 10 percent ethanol) from 12 trial provinces to the entire country by 2020. In addition, the State Council of the PRC executive meeting decided to promote the usage of ethanol fuel in another 14 provinces in addition to the original 12 trial provinces; and ii.) The building of "ecological civilization" is listed as one of the top ten goals of the 13(th) Five Year Plan. Driven by the policies mentioned above, ethanol producers have to replace outdated equipment by investing in more advanced production systems that generate high production efficiency and low pollutant discharge. The necessity for upgrades of manufacturing facilities, replacement of production systems and mass-production trends drive demand for advanced ethanol production system in the alcoholic beverage industry in the PRC. We believe that, with our extensive experience and expertise in ethanol production system industry, we are well positioned to capture growth opportunities in the PRC. For the period ended H1 2019, the major ethanol production system technology integrated services projects for the ethanol fuel industry were with Heilongjiang Hongzhan Bioenergy Co., Ltd, Inner Mongolia Zhongneng Biotechnology Co., Ltd, Heilongjiang Wanlirunda Bioenergy Co., Ltd and for the alcoholic beverage industry were with Fuyu Huihai Wine Industry Co., Ltd, Jilin Xintianlong Industries Co., Ltd, Henan Xinheyang Alcohol Co., Ltd respectively.

The gross profit increased by 209.7% to RMB 49.9 million (c. GBP5.6 million) for the H1 2019 period from RMB 16.1 million (c. GBP1.8 million) for H1 2018. Our overall gross profit margin increased to 30.4% for the H1 2019 period from 23.4% for H1 2018.

Order Book and Contract Backlog

We commenced H1 2019 with a strong order book of RMB 768.1 million (c. GBP86 million). This number includes new contracts to be started and the proportion of anticipated revenue from contracts which have started but not yet completed.

The following table sets forth the movement of backlog of our projects during the year ended 31 December 2018 and for the six months end 2019:

 
 
                                               Year to 31 December   Six months to 
                                                              2018    30 June 2019 
                                                           RMB'000         RMB'000 
 Contract value (exclusive of value-added 
  tax) of the beginning of the year/period                  98,565         329,577 
 Contract value (exclusive of value-added 
  tax) of new contracts awarded during the 
  year/period                                              480,990         602,378 
 Less: 
 Revenue recognised during the year/period.              (249,978)       (163,897) 
 Total                                                     329,577         768,058 
 

Business

The Group is a leading ethanol production system technology integrated service provider in the PRC. The Group primarily provide integrated services including engineering design, equipment manufacturing, installation and commissioning and subsequent maintenance for the core system of ethanol production system in the ethanol fuel and alcoholic beverage industries in the PRC. In addition, the Group also provided its technology integrated services for other chemical production systems in Canada, Russia, Thailand and other countries.

With thirteen years of operating history, the Company has gained substantial experience and established a solid reputation in terms of advanced technology skills and proven track records in ethanol production system industry in the PRC. According to a recently commissioned report from the China Insights Consultancy Limited, an independent market research and consulting company, we ranked first in terms of revenue with a market share of approximately 7.2%, in the ethanol production system industry in the PRC in 2018.

Research and Development

We have established a solid reputation in terms of advanced technology skills and proven track records in the ethanol production system industry in the PRC. Over the years, we have been devoted to research and development to drive improvement and innovation in technologies to be applied to the core system of the ethanol production system, we intend to continue to invest in our research and development efforts.

As at the date of this report, we had 31 patented technologies, which we have incorporated into our production procedures. In addition, as at the date of this report, the Group has submitted 13 patent registrations in the PRC, one patent application in Brazil and two ongoing research and development projects. We believe our advanced technologies and research and development capabilities have given us a competitive edge and allowed us to continue in securing contracts from customers through our provision of ethanol production system technology integrated services.

Business Strategies

Our goal is to continue to enhance our overall competitiveness and to capture greater market share in the ethanol production system industry and expand our presence to solidify our position as a leading ethanol production system technology integrated service provider in the PRC. To achieve this goal, we intend to pursue the following strategies:

-- continue to maintain our leading market position by undertaking more projects in the PRC; and

-- continue to focus on research and development to strengthen our design and engineering capability.

Whilst the business fundamentals and outlook have substantially grown over the last three years, we are not seeing the value reflected in the Company's share price. This is both causing frustration amongst the Board and investors, as well as making it unattractive for the Company to raise additional capital to expand the business. Our Directors are of the view that we will be better served by listing our shares on the Main Board of the HKEx, conditional upon which we would seek to withdraw our shares from AIM, and we have submitted an application to list the Company's shares on the Main Board of HKEx on 21 June 2019. The Listing Application is currently being vetted by the HKEx.

The HKEx is a larger and more liquid stock market with investors who can more readily understand our business operations and the industry and market we are in. We believe this will better accommodate our growth and, at the same time, increase the investment value of our shares which is expected to be reflected in our medium to long term market valuation. This is expected to lead to an increased share price and offer more opportunity to raise capital. There is no certainty when or if our application will be approved by the listing committee of the board of directors of HKEx. As such, there can be no certainty at this stage that the application to HKEx will be successful. We will continue to stress that we are committed to remaining public and for our shares to be traded on an internationally recognised stock exchange. The Company will keep the market appraised of developments with the application process and the intended withdrawal from AIM during the course of the application process.

Download link for the Listing Application: https://www1.hkexnews.hk/app/sehk/2019/2019062106/documents/sehk201906240017.pdf

Outlook

The Board and I are very optimistic about the remainder of 2019 and the long-term future of CNE. The continuous favourable changes in the PRC ethanol production policies in recent year such as the implementation of the 13(th) Five Year Plan for Renewable Energy Development clearly demonstrated the intention of the PRC government to develop the ethanol fuel industry. We believe that, our advanced technologies and research and development capabilities have given us a competitive edge and allowed us to continue in securing contracts from customers through our provision of high-quality and innovative ethanol production system technology integrated services in the PRC.

I am very confident about the outlook for 2020 and the investment value of our shares which is expected to be reflected in our medium to long term market valuation.

On behalf of the Board, I would like to extend my appreciation to our valued shareholders, supportive business partners and associates, insightful management and dedicated staff for all their contribution and commitment towards the Company. I would also like to thank the Board for their invaluable counsel in steering the Group through this exciting time.

Yu Weijun

Chairman

Consolidated Income Statements

 
                                                     Unaudited                    Unaudited                    Audited 
                                    Six months to 30 June 2019   Six months to 30 June 2018   Year to 31 December 2018 
                                                       RMB'000                      RMB'000                    RMB'000 
 
 Revenue                                               163,897                       69,065                    249,978 
 Cost of sales                                       (114,034)                     (52,922)                  (177,374) 
                                   ===========================  ===========================  ========================= 
 Gross profit                                           49,863                       16,143                     72,604 
 Selling and marketing expenses                        (3,477)                      (2,882)                    (5,801) 
 Administrative expenses                              (14,897)                      (6,617)                   (20,218) 
 (Impairment losses)/ net 
  reversal of impairment losses 
  on financial assets and 
  contract assets                                      (1,871)                        2,179                      (362) 
 Other income                                              791                           50                      1,685 
 Other (losses)/gains - net                            (2,730)                         (54)                        263 
                                   ===========================  ===========================  ========================= 
 Operating profit                                       27,679                        8,819                     48,171 
 Finance income                                             20                           16                         22 
 Finance costs                                           (635)                        (702)                    (1,094) 
                                   ===========================  ===========================  ========================= 
 Finance costs-net                                       (615)                        (686)                    (1,072) 
 Profit before income tax                               27,064                        8,133                     47,099 
                                   ===========================  ===========================  ========================= 
 Income tax (expenses)/credits                         (5,713)                        5,372                    (1,278) 
                                   ---------------------------  ---------------------------  ------------------------- 
 Profit for the period/year                             21,351                       13,505                     45,821 
                                   ---------------------------  ---------------------------  ------------------------- 
 Profit attributable to Owners of 
  the Company                                           21,351                       13,505                     45,821 
                                   ---------------------------  ---------------------------  ------------------------- 
 
  Earnings per share for profit 
  attributable to Owners of the 
  Company (expressed in RMB per 
  share) 
 Basic                                                   0.048                        0.030                      0.102 
                                   ===========================  ===========================  ========================= 
 Diluted                                                 0.046                        0.030                      0.102 
                                   ===========================  ===========================  ========================= 
 

Consolidated Statement of Comprehensive Income

 
                                                     Unaudited                    Unaudited                    Audited 
                                    Six months to 30 June 2019   Six months to 30 June 2018   Year to 31 December 2018 
                                                       RMB'000                      RMB'000                    RMB'000 
 
 Profit for the period/year                             21,351                       13,505                     45,821 
 Other comprehensive income 
  Items that may be reclassified 
  to profit or loss 
  - Exchange differences on 
  translation of foreign 
  operations                                             (169)                        (210)                      (224) 
                                   ---------------------------  ---------------------------  ------------------------- 
 Other comprehensive income for 
  the period/year, net of tax                            (169)                        (210)                      (224) 
 
 Total comprehensive income for 
  the period/year                                       21,182                       13,295                     45,597 
                                   ---------------------------  ---------------------------  ------------------------- 
 
 Total comprehensive income 
  attributable to Owners of the 
  Company                                               21,182                       13,295                     45,597 
                                   ---------------------------  ---------------------------  ------------------------- 
 

Consolidated Statement of Financial Position

 
                                           As at 30 June   As at 31 December 
                                                    2019                2018 
                                                 RMB'000             RMB'000 
 ASSETS 
 Non-current assets 
 Financial assets at fair value through 
  other comprehensive income                       5,000                   - 
 Investment in an associate                            -                   - 
 Property, plant and equipment                     8,262               6,457 
 Land use rights                                       -               2,608 
 Intangible assets                                15,221              12,782 
 Right-of-use assets                               6,846                   - 
 Deferred tax assets                               5,883               5,752 
                                          ==============  ================== 
                                                  41,212              27,599 
                                          ==============  ================== 
 Current assets 
  Inventories                                      7,898               3,661 
 Contract assets                                 110,308              88,465 
 Trade and bills receivables                     104,567             103,629 
 Other receivables and prepayment                 60,472              17,980 
 Restricted cash                                   1,658               1,230 
 Cash and cash equivalents                         3,140               6,358 
                                          ==============  ================== 
                                                 288,043             221,323 
                                          ==============  ================== 
 Total assets                                    329,255             248,922 
                                          ==============  ================== 
 EQUITY 
  Equity attributable to Owners of the 
  Company 
 Share capital                                     1,541               1,541 
 Other reserves                                   67,890              67,828 
 Retained earnings                                23,008               1,657 
                                          ==============  ================== 
 Total equity                                     92,439              71,026 
                                          ==============  ================== 
 LIABILITIES 
  Non-current liabilities 
  Lease liabilities                                3,315                   - 
                                          ==============  ================== 
 Current liabilities 
  Contract and refund liabilities                 10,203              21,028 
 Bank and other borrowings                        15,000               6,540 
 Convertible notes                                12,786                   - 
 Trade payables                                   72,162              69,250 
 Other payables                                   94,818              59,355 
 Lease liabilities                                 1,082                   - 
 Current income tax liabilities                   27,450              21,723 
                                          ==============  ================== 
                                                 233,501             177,896 
                                          ==============  ================== 
 Total liabilities                               236,816             177,896 
                                          ==============  ================== 
 Total equity and liabilities                    329,255             248,922 
                                          ==============  ================== 
 Net current assets                               54,542              43,427 
                                          --------------  ------------------ 
 

Consolidated Statement of Changes in Equity

 
                                                                       (Accumulated losses)/retained 
                                    Share capital     Other reserves                        earnings                  Total 
                                          RMB'000            RMB'000                         RMB'000                RMB'000 
 
 Balance at 1 
  January 2018                              1,541             72,273                        (44,164)                 29,650 
 Comprehensive 
 income 
 - Profit for 
  the year                                      -                  -                          45,821                 45,821 
 - Other 
  comprehensive 
  income                                        -              (224)                               -                  (224) 
                 ================================                     ==============================  ===================== 
 Total 
  comprehensive 
  income for 
  the year                                      -              (224)                          45,821                 45,597 
                 ================================  =================  ==============================  ===================== 
 Transactions 
 with owners, 
 recognised 
 directly in 
 equity 
 Share-based 
  payment 
  expenses                                      -                460                               -                    460 
 Buy-back of 
  shares                                        -            (4,681)                               -                (4,681) 
                 ================================  -----------------  ============================== 
 Total 
  transactions 
  with owners                                   -            (4,221)                               -                (4,221) 
                 ================================  -----------------  ==============================  ===================== 
 Balance at 31 
  December 2018                             1,541             67,828                           1,657                 71,026 
                 ================================  =================  ==============================  ===================== 
 (Unaudited): 
 Balance at 1 
  January 2018                              1,541             72,273                        (44,164)                 29,650 
 Comprehensive 
 income 
 - Profit for 
  the period                                    -                  -                          13,505                 13,505 
 - Other 
  comprehensive 
  income                                        -              (210)                               -                  (210) 
 Total 
  comprehensive 
  income for 
  the period                                    -              (210)                          13,505                 13,295 
 Transactions 
 with owners, 
 recognised 
 directly in 
 equity 
 Share-based 
  payment 
  expenses                                      -                230                               -                    230 
 Buy-back of 
  shares                                        -            (4,681)                               -                (4,681) 
                 ================================                     ------------------------------ 
 Total 
  transactions 
  with owners                                   -            (4,451)                               -                (4,451) 
                 ================================  =================  ------------------------------  ===================== 
 Balance at 30 
  June 2018                                 1,541             67,612                        (30,659)                 38,494 
                 ================================ 
 Balance at 1 
  January 2019                              1,541             67,828                           1,657                 71,026 
 Comprehensive 
 income 
 - Profit for 
  the period                                    -                  -                          21,351                 21,351 
 - Other 
  comprehensive 
  income                                        -              (169)                               -                  (169) 
                 --------------------------------  -----------------  ------------------------------  --------------------- 
 Total 
  comprehensive 
  income for 
  the period                                    -              (169)                          21,351                 21,182 
                 --------------------------------  -----------------  ------------------------------  --------------------- 
 Transactions 
 with owners, 
 recognised 
 directly in 
 equity 
 Share-based 
  payment 
  expenses                                      -                231                               -                    231 
                 ================================  =================  ==============================  ===================== 
 Total 
  transactions 
  with owners                                   -                231                               -                    231 
                 ================================  =================  ==============================  ===================== 
 Balance at 30 
  June 2019                                 1,541             67,890                          23,008                 92,439 
                 ================================  =================  ==============================  ===================== 
 

Consolidated Statement of Cash Flows

 
                                                     Unaudited                    Unaudited                    Audited 
                                    Six months to 30 June 2019   Six months to 30 June 2018   Year to 31 December 2018 
                                                       RMB'000                      RMB'000                    RMB'000 
 Cash flows from operating 
 activities 
 Cash (used in)/generated from 
  operations                                           (6,680)                       22,790                     10,069 
 Income tax paid                                         (116)                      (2,910)                    (3,425) 
 Interest paid                                           (615)                        (686)                    (1,072) 
                                   ===========================  ===========================  ========================= 
 Net cash (used in)/generated 
  from operating activities                            (7,411)                       19,194                      5,572 
                                   ===========================  ===========================  ========================= 
 Cash flows from investing 
 activities 
 Purchases of property, plant and 
  equipment                                            (3,378)                        (206)                      (889) 
 Purchases of intangible assets                        (2,800)                      (2,572)                    (5,954) 
 Proceeds from disposal of 
  property, plant and equipment                            230                            3                          3 
 Investment in financial assets 
 at fair value through other 
 comprehensive income                                  (5,000)                            -                          - 
                                   ===========================  ===========================  ========================= 
 Net cash used in investing 
  activities                                          (10,948)                      (2,775)                    (6,840) 
                                   ===========================  ===========================  ========================= 
 Cash flows from financing 
 activities 
 Proceeds from bank and other 
  borrowings                                            13,080                        3,300                      6,800 
 Proceeds from convertible notes                        10,122                            -                          - 
 Repayments of bank and other 
  borrowings                                           (4,620)                      (1,649)                   (10,367) 
 Principal elements of lease 
 payments                                                (407)                            -                          - 
 Cash advance from related 
  parties                                                1,972                        4,740                     15,404 
 Repayment to related parties                          (1,597)                      (7,133)                   (11,165) 
 Payment for listing related 
 expenses                                              (1,739)                            -                          - 
 Increase in guarantee deposits 
  for borrowings                                       (1,658)                            -                    (1,230) 
 Net cash generated from/(used 
  in) financing activities                              15,153                        (742)                      (558) 
                                   ---------------------------  ---------------------------  ------------------------- 
 Net (decrease)/increase in cash 
  and cash equivalents                                 (3,206)                       15,677                    (1,826) 
 Cash and cash equivalents at 
  beginning of period/year                               6,358                        8,180                      8,180 
 Translation differences on cash 
  and cash equivalents                                    (12)                        (237)                          4 
 Cash and cash equivalents at end 
  of period/year                                         3,140                       23,620                      6,358 
                                   ---------------------------  ---------------------------  ------------------------- 
 

Notes to the Interim Financial Information - Period ended 30 June 2019

   1.      General information 

The Company was incorporated in Jersey on 2 May 2006 as a public company with limited liability under the Jersey Companies Law. The address of its registered office is at Queensway House, Hilgrove Street, St Helier, Jersey, Channel Islands, JE1 1ES.

The Company is an investment holding company and its subsidiaries are principally engaged in the provision of ethanol production system technology integrated service in the ethanol fuel and alcoholic beverage industries in the PRC.

The Financial Information is presented in Renminbi ("RMB"), unless otherwise stated.

   2.    Summary of significant accounting policies 

The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

   2.1    Basis of preparation 

The consolidated financial statements of the Group has been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB"), including related interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

The consolidated financial statements has been prepared under the historical cost convention, except for certain financial assets and liabilities measured at fair value.

The preparation of the consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.

Except as described below, the accounting policies applied are consistent with those of the 2018 financial statements as described therein.

(a) IFRS 16

The Group has adopted IFRS 16 retrospectively from 1 January 2019, but has not restated the comparative reporting periods, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 January 2019.

   (i)   Adjustments recognised on adoption of IFRS 16 

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of January 1, 2019. The lessee's incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 6.53%.

 
           Operating lease commitments disclosed as at 31 December 
            2018                                                             6,019 
           Less: short-term leases recognised on a straight-line 
            basis as expense                                                 (423) 
                                                                      ------------ 
                                                                             5,596 
                                                                      ------------ 
           Discounted using the lessee's incremental borrowing 
            rate of at the date of initial application                       4,804 
           Lease liability recognised as at 1 January 2019                   4,804 
                                                                      ------------ 
             Of which are: 
                 Current lease liabilities                                   1,489 
                 Non-current lease liabilities                               3,315 
                                                                      ------------ 
                                                                             4,804 
                                                                      ------------ 
 

Right-of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at 31 December 2018. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

The recognised right-of-use assets relate to properties.

The change in accounting policy affected the following items in the balance sheet on 1 January 2019:

   --     land use rights - decreased by RMB 2,608,000 
   --     right-of-use assets - increased by RMB 7,412,000 
   --     lease liabilities - increased by RMB 4,804,000 

(ii) Practical expedients applied

In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:

   --     reliance on previous assessments on whether leases are onerous; 

-- the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases; and

-- the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application.

The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Group relied on its assessment made applying IAS 17 and IFRIC 4 Determining whether an Arrangement contains a Lease.

(iii) The Group's leasing activities and how these are accounted for

The Group leases an office, the rental contract for which is made for a fixed period of 5 years. The lease agreement does not impose any covenants, but leased asset may not be used as security for borrowing purposes.

Until the 2018 financial year, payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.

From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Right-of-use assets are measured at cost comprising the following:

   --     the amount of the initial measurement of lease liability; 

-- any lease payments made at or before the commencement date less any lease incentives received;

   --     any initial direct costs, and 
   --     restoration costs. 

Payments associated with short-term leases are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.

   3.    Earnings per share 
 
                                                     Unaudited                    Unaudited                    Audited 
 Basic earnings per share           Six months to 30 June 2019   Six months to 30 June 2018   Year to 31 December 2018 
                                                       RMB'000                      RMB'000                    RMB'000 
 Profit attributable to Owners of 
  the Company                                           21,351                       13,505                     45,821 
 Weighted average number of 
  ordinary shares in issue 
  (thousand shares)                                    444,448                      449,077                    449,319 
                                   ---------------------------  ---------------------------  ------------------------- 
 Basic earnings per share                                0.048                        0.030                      0.102 
                                   ---------------------------  ---------------------------  ------------------------- 
 
 
                                                     Unaudited                    Unaudited                    Audited 
 Diluted earnings per share         Six months to 30 June 2019   Six months to 30 June 2018   Year to 31 December 2018 
                                                       RMB'000                      RMB'000                    RMB'000 
 Profit attributable to Owners of 
  the Company                                           21,351                       13,505                     45,821 
 Weighted average number of 
  ordinary shares in issue 
  (thousand shares)                                    462,325                      449,077                    449,319 
                                   ---------------------------  ---------------------------  ------------------------- 
 Dilutive earnings per share                             0.046                        0.030                      0.102 
                                   ---------------------------  ---------------------------  ------------------------- 
 

The Company has one category of dilutive potential ordinary shares: share options granted under the Pre-IPO Share Option Scheme for the year ended 31 December 2018 and six months ended 30 June 2018 and 2019. The number of shares that would have been issued assuming the exercise of the share options less the number of shares that could have been issued at fair value (determined as the average market price per share for the year/period) for the same total proceeds is the number of shares issued for no consideration. The resulting number of shares issued for no consideration is included in the weighted average number of ordinary shares as the denominator for calculating diluted earnings per share. The Group has one additional category of dilutive potential ordinary shares for the six months ended 30 June 2019: convertible notes which could be converted into ordinary shares of the Company.

The share options granted under the Pre-IPO Share Option Scheme are not included in the calculation of diluted earnings per share because they are antidilutive for the year ended 31 December 2018 and six months ended 30 June 2018 and 2019. These options could potentially dilute basic earnings per share in the future.

Convertible notes are included in the determination of dilutive earnings per share from their date of issue.

   4.    Comparative figures 

Management revisited the accounting treatments for certain transactions entered into by the Group in previous years and concluded that adjustments are required to be made to the comparative information presented (i.e. consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the six months period ended 30 June 2018). The nature of adjustments are consistent with those disclosed in the consolidated financial statements for the year ended 31 December 2018. In addition, certain reclassification and adjustment related to the adoption of IFRS9 are also made to ensure the comparability with the current period's results. Details of the adjustments are available on the Company's website.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

IR BSGDCGSDBGCR

(END) Dow Jones Newswires

September 27, 2019 10:45 ET (14:45 GMT)

1 Year China New Energy Chart

1 Year China New Energy Chart

1 Month China New Energy Chart

1 Month China New Energy Chart
Your Recent History
LSE
CNEL
China New ..
Register now to watch these stocks streaming on the ADVFN Monitor.

Monitor lets you view up to 110 of your favourite stocks at once and is completely free to use.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V:gb D:20191122 23:13:20