REA HY Results Announcement 141111

8/3/2019 REA HY Results Announcement 141111

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RENEWABLE ENERGY ASIA GROUP LIMITED

(Company Registration No. 33437)

This announcement has been reviewed by the Company's Sponsor, RHT Capital Pte. Ltd., forcompliance with the relevant rules of the Singapore Exchange Securities Trading Limited (SGX-ST).The Company's Sponsor has not independently verified the contents of this announcement.

This announcement has not been examined or approved by the SGX-ST and the SGX-ST assumes noresponsibility for the contents of this announcement including the correctness of any of thestatements or opinions made or reports contained in this announcement.

The contact person for the Sponsor is:-

Name: Mr. Lau Yan Wai, Registered Professional, RHT Capital Pte. Ltd. Address: Six Battery Road #10-01, Singapore 049909Tel: 6381 6757


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FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT

PART I: INFORMATION REQUIRED FOR QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEARANNOUNCEMENTS

1(a)(i) An income statement and statement of comprehensive income or a statement of comprehensiveincome (for the group), together with a comparative statement for the corresponding period of theimmediately preceding financial year.

Consolidated statement of comprehensive income for the financial period ended 30 September 2011

30-Sep-11 30-Sep-10 ChangeRMB'000 RMB'000 %

Revenue 73,270 69,330 6Cost of goods sold (69,556) (56,459) 23Gross profit 3,714 12,871 (71)

Other revenue 6,584 15 43,793

Selling and distribution expenses (428) (545) (21)General and administration expenses (13,858) (10,411) 33Other expenses (348) (133) 162Finance costs, net (5,826) 434 (1,442)Share of profit/(losses) of associates (51) -

Profit / (Loss) before income tax fromcontinuing operations (10,213) 2,231 (558)Income tax - (4,335) (100)Profit / (Loss) for the period from continuingoperations (10,213) (2,104) 385

Discontinued operations:Profit after tax for the period from discontinuedoperations 598 5,054 *n/mProfit / (loss) for the period (9,615) 2,950

*n/m: not meaningful due to the disposal of the fastening business.

6 months ended


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30-Sep-11 30-Sep-10 ChangeRMB'000 RMB'000 %

Other comprehensive income, net of incometax:Foreign currency translation differences forforeign operations (5,381) (2,028) 165Other comprehensive income for the period, netof tax (5,381) (2,028) 165Total comprehensive income for the period,net of tax (14,996) 922Profit / (loss) attributable to:Owners of the Company (9,615) 2,725 (453)Non-controlling interests - 225 (100)

(9,615) 2,950

Total comprehensive income attributable to:Owners of the Company (14,996) 697 (2,252)Non-controlling interests - 225 (100)

(14,996) 922

6 months ended

1(a)(ii) Notes to the income statement for the current financial period reported on and the correspondingperiod of the immediately preceding financial year.

Loss for the year is arrived at after charging/(crediting) the following items:

30-Sep-11 30-Sep-10RMB'000 RMB'000

Depreciation of property, plant and equipment 4,614 2,718 Property, plant and equipment written off 5 - Interest income (825) (4) Foreign exchange differences 423 (42) Impairment loss on inventories 205 -Interest expense 2,481 1,996 Share option expenses - 788

6 months Ended


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1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement asat the end of the immediately preceding financial year.

Statement of financial position as at 30 September 2011

30-Sep-11 31-Mar-11 30-Sep-11 31-Mar-11

RMB'000 RMB'000 RMB'000 RMB'000

ASSETS

Non-current assetsProperty, plant and equipment 85,565 82,623 31 41

Investment in subsidiaries - - 20,625 182,916

Investment in associate 58,934 48,984

Total non-current assets 144,499 131,607 20,656 182,957

Inventories 83,694 80,097 - -

Trade receivables 40,699 46,306 - -

Other receivables 36,968 43,757 2673 123

Cash and cash equivalents 36,275 48,507 3,774 4,885

Related company balances - - 205,600 -

Total current assets 197,636 218,667 212,047 5,008

Disposal group classified as held-for sale - 138,962 - 42,001

Total assets 342,135 489,236 232,703 229,966

EQUITY AND LIABILITIES

Equity

Share capital 92,561 92,561 92,561 92,561

Share premium 184,984 184,984 184,984 184,984

Warrant reserve 3,408 3,408 3,408 3,408

Share options reserve 2,364 2,364 2364 2,364Statutory reserve - 1,578 - -

Foreign currency translation reserve (5,555) (174) - -

Accumulated losses (111,664) (102,048) (77,741) (72,296)

Equity attributable to equity holders of the parent 166,098 182,673 205,576 211,021

Non-controlling interests - 65 -

Total equity 166,098 182,738 205,576 211,021

Group Company


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30-Sep-11 31-Mar-11 30-Sep-11 31-Mar-11

RMB'000 RMB'000 RMB'000 RMB'000

Current liabilities

Trade payables 50,012 98,452 -

Other payables 63,961 26,702 26,576 9,861

Bank loans 62,000 88,450 - 6,463

Current tax payable 64 51 51 51

Related company balances - - 500 -

Total current liabilities 176,037 213,655 27,127 16,375

Liabilitiies directly associated with

disposal group classified as held-for-sale - 92,843 2,570

Total liabilities 176,037 306,498 27,127 18,945

Total equity and liabilities 342,135 489,236 232,703 229,966

Group Company


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1(b)(ii) In relation to the aggregate amount of the group's borrowings and debt securities, specify thefollowing as at the end of the current financial period reported on with comparative figures as at theend of the immediately preceding financial year:(A) the amount repayable in one year or less, or on demand;(B) the amount repayable after one year;(C) whether the amounts are secured or unsecured; and(D) details of any collaterals.

Amount repayable within one year or less, or on demand

Secured Unsecured Secured UnsecuredRMB'000 RMB'000 RMB'000 RMB'000

62,000 - 88,450 -

30-Sep-11 31-Mar-11

As at 30 September 2011, there were no outstanding amounts repayable after one year.

Details of collaterals:-

As at the 30 September 2011, the bank loans and borrowings of RMB 62.0 million were secured by:-1. Corporate guarantees by the controlling shareholder;2. Corporate guarantees by a company in which the controlling shareholder has substantial interest;3. Certain inventories of the Group4. Certain trade receivables of the Group5. Cash and bank balances of the Group

In the previous financial year, the bank loans and borrowings of RMB61.9 million were secured by:-1. Corporate guarantees by certain subsidiaries of the holding company and the holding company;2. Certain of the Groups property, plant and equipment.


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1(c) A statement of cash flows (for the group), together with a comparative statement for thecorresponding period of the immediately preceding financial year.

30-Sep-11 30-Sep-10RMB'000 RMB'000

Profit/(Loss) before income tax (9,615) 16,137

Adjustment for:Interest income (825) (4) Non-controlling interest written back (65) -Depreciation of property, plant and equipment 4,614 2,718 Foreign currency realignment - (1,437) Impairment loss on inventories 205 - Interest expense 2,481 1,996 Property, plant and equipment written off 5 Share of loss from associate 51 - Share options expenses - 788 Operating profit before changes in working capital (3,149) 20,198

Inventories (3,802) (49,498) Trade receivables 5,607 (51,806) Other receivables 325 7,215 Trade and bills payable (48,440) 77,650 Other payables 37,258 (1,587) Cash generated (used in)/generated from operations (12,201) 2,172

Interest paid (2,481) (1,996)

Income tax paid 13 (3,136) Net cash (used in)/generated from operating activities (14,669) (2,960)

Cash flows from investing activitiesPurchase of plant and equipment (7,770) (7,210) Investment in associate (10,000) -Deposit placed for acquisition of a wind farm - (38,000) Proceeds from disposal of investment in subsidiary company 39,546 - Interest received 825 4 Net cash (used in)/generated from investing activities 22,601 (45,206)

6 months endedGroup


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30-Sep-11 30-Sep-10RMB'000 RMB'000

Cash flows from financing activitiesDrawdown of bank loans - 30,000 Net repayment of bank loans (19,987) (5,743) Finance lease principal payments - (3,438) Net proceeds from issuance of shares - 180,493

Net cash (used in)/generated from financing activities (19,987) 201,312

Net increase/(decrease) in cash and cash equivalents (12,055) 153,146 Cash and cash equivalents at beginning of period 48,507 4,607 Effect of change in foreign exchange rates (177) -

Cash and cash equivalents at end of period 36,275 157,753

Group

6 months ended


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Share Share Share options Exchange Warrant Retained

The Company (RMB '000) capital premium reserve Reserve reserve earnings

Balance as at 1 April 2010, as previously presented 75,518 28,797 - (9,254) 4,145 (

Effect of change in functional currency (3,652) (3,360) - 9,254 (737)

Balance as at 1 April 2010, restated 71,866 25,437 - - 3,408 (

Total comprehensive income for the period - - - - -

Issuance of ordinary shares 20,695 159,798 - - -

Issuance of share options during the period - - 788 - -

Balance as at 30 September 2010 92,561 185,235 788 - 3,408 (6

Balance as at 1 April 2011 92,561 184,984 2,364 - 3,408 (

Total comprehensive income for the period - - - - -

Balance as at 30 September 2011 92,561 184,984 2,364 - 3,408 (


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1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue,share buy-backs, exercise of share options or warrants, conversion of other issues of equitysecurities, issue of shares for cash or as consideration for acquisition or for any otherpurpose since the end of the previous period reported on. State also the number of sharesthat may be issued on conversion of all the outstanding convertibles, as well as the numberof shares held as treasury shares, if any, against the total number of issued shares excludingtreasury shares of the issuer, as at the end of the current financial period reported on and asat the end of the corresponding period of the immediately preceding financial year.

There was no movement in the issued and paid up capital of the Company for the 6 months

period ended 30 September 2011.

As at 30 September 2011, there were outstanding options for 1,850,000 (30 September 2010:7,500,000) unissued ordinary shares of the Company under options granted pursuant to theESOS. Except as disclosed above, there were no unissued shares of the Company or itssubsidiaries under any outstanding convertibles as at 30 September 2011.

The total number of issued ordinary shares as at 30 September 2011 was 620,115,400 (30September 2010: 620,115,400) of which none (30 September 2010: Nil) were held by theCompany as treasury shares.

1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of thecurrent financial period and as at the end of the immediately preceding year.

30-Sep-11 31-Mar-11No of shares No of shares

RMB RMB

Balance as at the end of period 620,115,400 620,115,400

Company

1(d)(iv) A statement showing all sales, transfers, disposals, cancellation and/or use of treasuryshares as at the end of the current financial period reported on.

The Company does not hold any treasury shares as at 30 September 2011.

2. Whether the figures have been audited or reviewed, and in accordance with which auditingstandard or practice.

These figures have not been reviewed by the auditors.


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3. Where the figures have been audited or reviewed, the auditors report (including anyqualifications or emphasis of a matter).

Not applicable.

4. Whether the same accounting policies and methods of computation as in the issuers mostrecently audited annual financial statements have been applied.

The Group has applied the same accounting policies and methods of computation in thepreparation of the financial statements for the current financial period as those applied in the

financial statements for the year ended 31 March 2011.

5. If there are any changes in the accounting policies and methods of computation, includingany required by an accounting standard, what has changed, as well as the reasons for, andthe effect of, the change.

There are no changes in the accounting policies and methods of computation.

6. Earnings per ordinary share of the group for the current financial period reported on and thecorresponding period of the immediately preceding financial year, after deducting anyprovision for preference dividends:(a) based on the weighted average number of ordinary shares on issue; and(b) on a fully diluted basis (detailing any adjustments made to the earnings).

30-Sep-11 30-Sep-10RMB RMBCents Cents

Based on the weighted average number of ordinary shares in issue (1.55) 0.44

On a fully diluted basis (1.55) 0.44

Group6 months ended

Earnings per shareThe computation of the basic earnings per share is based on the loss attributable to ordinaryequity holders of the Company of RMB9,616,000 (2010: RMB2,725,000) and the weightedaverage number of ordinary shares outstanding of 620,115,400 (FY11: 520,006,111) duringthe financial period.


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The computation of the diluted earnings per share is based on the loss attributable to ordinaryequity holders of the Company of RMB9,615,000 (2010: RMB2,725,000) and the weightedaverage number of ordinary shares outstanding including the potential ordinary shares in theform of shares options granted under the Superior Employee Share Option Schemeannounced on 13 July 2010 of 620,115,400 (FY10: 520,660,843) during the financial year.

7. Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the:(a) current financial period reported on; and(b) immediately preceding financial year.

30-Sep-11 31-Mar-11 30-Sep-11 31-Mar-11

26.79 29.47 33.15 34.03

Group Company

Net asset value per share (RMB Cents)

8. A review of the performance of the group, to the extent necessary for a reasonableunderstanding of the groups business. It must include a discussion of the following:(a) any significant factors that affected the turnover, costs, and earnings of the group for

the current financial period reported on, including (where applicable) seasonal orcyclical factors; and

(b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on.

Statement of comprehensive income

Group revenue improved marginally by 5.6% to RMB73.3 million for the six months ended 30September 2011 (HY2012), as compared to the previous corresponding period (HY2011).This is mainly due to the increased in the sales of wind turbines structures during the period.

Cost of manufacturing increased due to the changes in production specifications made by amajor customer, as well as quality issues that have since been rectified. These, together with therise in raw material and labour costs and the appreciation of the RMB against other majorcurrencies, resulted in the decrease in gross profit to RMB3.7 million, from RMB12.9 million inHY2011. Consequently, gross margin declined to 5.1% in HY2012, from 18.6% in HY2011. .

Other revenue for the period increased from RMB0.015 million to RMB6.6 million, due todividend income received from the Groups investment in an associated company, DatangBaotou Asia Electricity Co Ltd, as well as a RMB 2.7 million one-off write-back of provision fornon-trade payables.


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Selling and distribution expenses decreased by 21% to RMB0.43 million, mainly due to thedisposal of the Groups fastening business in May 2011. General and administration expensesincreased by 33% to RMB 13.9 million, compared to HY2011. This is mainly due to the increasedin staff costs as well as the general and administration expenses incurred in our projects atconstruction period.

The increase in other expenses was due to the provision of impairment loss on slow-movinginventories.

Finance costs for HY2012 increased by 1443% as compared to HY2011, due to an increase in

borrowings, as well as interest rates during the period.

Income tax expense for the current financial period has decreased significantly as a result of theloss incurred by the Groups operation.

Statement of financial position

The Groups property, plant and equipment stood at RMB85.6 million as at 30 September 2011,compared to RMB82.6 million at 31 March 2011. This was due to additional equipmentacquired during the period for productions lines.

Investment in associate increased by 20.3% to RMB58.9 million following the Groupsinvestment in an associated company in line with the strategic cooperative agreement signedwith China Datang Corporation Renewable Power Co., Ltd. This company was incorporated inthe PRC in July 2011 to engage in wind energy-related activities.

Trade receivables decreased by RMB 5.7 to RMB 40.7 million in HY2012. This decrease is in linewith lower sales recorded during the period as a result of a fall in orders, which led to adecrease in other receivables from prepaid purchase of raw materials as manufacturing activityfell in tandem with the lower sales.

Cash and cash equivalents at end of the period decreased by 25% due to negative operatingcash flow during the period and an investment in an associate.

Trade payables fell significantly by 49% to RMB 50.0 million in HY2012, in line with the reducedmanufacturing.

Other payables on the other hand have increased substantially by 224% to RMB 64.0 million inHY2012. The increase mainly comprise the increase in provision of accrued factory rental of RMB3.0 million and other operating expenses, as well as an interest-free shareholders loan of RMB22.0 million undertaken for working capital requirements. No prior provisions were madefor the accrued amount as operations only began in April 2010.


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Bank loans decreased by 30% to RMB 62.0 million , as a result of repayments in August 2011and new loans of RMB20 million undertaken in September 2011.

Statement of cash flows

The Group recorded negative operating cash flows of RMB14.7 million for HY2012, mainly dueto repayments made on Notes payables of about RMB30 million, and the offsetting of smallercontributions through funds received from trade receivables.

Cash amounting to RMB39.5 million generated from the disposal of the fastening business was

partially offset by the Groups investment in a joint venture with China Datang (RMB 10 million),along as well as in other plant, property and equipment (RMB 7.8 million) during the period. Inthis regard, net cash generated from investing activities was RMB 22.6 million.

Overall there was a net decrease of RMB12.06 million by 25% in the cash and cash equivalentfor the period as compared with 31 March 2011.

9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, anyvariance between it and the actual results.

Not applicable.

10. A commentary at the date of the announcement of the significant trends and competitiveconditions of the industry in which the group operates and any known factors or events thatmay affect the group in the next reporting period and the next 12 months.

Following the resolution of teething issues in its initial year of operation, the Group is nowdelivering orders to its customers satisfaction, and has since received an increase in committedorders for its products. The Group thus expects to ramp-up its manufacturing operations in theensuing months.

The development of renewable energy remains a focus of Chinas 12 th Five-Year Plan, as thecountry continues to work towards achieving its 2020 renewable energy goals. In this regard,

the Group will continue to partner established market players to tap opportunities that arise,particularly projects in the PRC relating to solar and offshore wind energy.

In October 2011, the Group incorporated a wholly-owned subsidiary, REA TEC Co., Ltd to engagein the design, manufacture and sale of renewable energy-related products, and to providerelated services including project design, consultancy and management. The subsidiary willallow the Group to better position itself as a provider of wind energy-related products andservices in the industry.

The above initiatives that the Group has put in place should position it more competitively overthe long term. Nevertheless, in order to effect a successful turnaround, the Group needs to


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overcome near-term challenges such as uncertainties in the economic conditions and higherborrowing costs with the tightening of the PRC debt financing market.

11. If a decision regarding dividend has been made:(a) Whether an interim (final) ordinary dividend has been declared (recommended);

and

None.

(b)(i) Amount per share in cents

Not applicable.

(b)(ii) Previous corresponding period in cents

None.

(c) Whether the dividend is before tax, net of tax or tax exempt. If before tax or net of tax, state the tax rate and the country where the dividend is derived. (If thedividend is not taxable in the hands of shareholders, this must be stated).

Not applicable.

(d) The date the dividend is payable.

Not applicable.

(e) The date on which Registrable Transfers received by the company (up to 5.00 pm)will be registered before entitlements to the dividend are determined.

Not applicable.

12. If no dividend has been declared (recommended), a statement to that effect.

No dividend has been declared or recommended.


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13. If the Group has obtained a general mandate from shareholders for IPTs, the aggregatevalue of such transactions as required under Rule 920 (1)(a)(ii). If no IPT mandate hasobtained, a statement to that effect.

Name of Interested Person Nature of Transactions

Aggregate value of all interested persontransactions during the financial periodunder review (excluding transactionsless than $100,000 and transactionsconducted under shareholdersmandate pursuant to Rule 920)

Aggregate value of all interested persontransactions conducted during thefinancial period under review undershareholders mandate pursuant to Rule920 (excluding transactions less than$100,000)

RMB000 RMB000

(1) Oceantec Industry Co., Ltd(formally known as Cenen IndustrialTechnology Co., Ltd)

Factory rental 3,360 Nil

(2) Nantong Jiaolong IndustrialDevelopment Co., Ltd

Sales Nil 3,023

14. USAGE OF PLACEMENT PROCEEDS PURSUANT TO RULE 704 (30) OF THE LISTING MANUALSECTION B: RULES OF CATALIST

There was no fund raising exercise during the period. As at 31 March 2011, the net placement proceeds

from the 100 million shares placement completed and announced on 24 September 2010 have beenutilised as follows:

Use of ProceedsRevisedusage

Actualusage Balance

SGD RMB RMB RMB RMB('000) ('000) ('000) ('000) ('000)

Wind farm acquisition 14,400 74,638 48,165 48,165 -

Working capital and property, plant andequipment 14,400 74,638 101,111 101,111 -

28,800 148,129 149,276 149,276 -

Proposed usage

The change in the proposed usage of placement proceeds was mainly due to the need for workingcapital to purchase plant and machinery following the cancellation of the plant and machinery leaseagreement with Oceantec Industry Co., Ltd (formerly known as Cenen Industrial Technology Co., Ltd) inNovember 2010.


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Negative Assurance Confirmation on Interim Financial Results Under Listing Manual of Catalist Rule 705(5)

We, Xu Jian and Zheng Lei, being two directors of Renewable Energy Asia Group Limited (the Company) dohereby confirm on behalf of the directors of the company that to the best of our knowledge, nothing has come tothe attention of the Board of Directors which may render the unaudited interim financial results of the Group andCompany (comprising the consolidated statements of financial positions, consolidated income statements,statements of comprehensive income, statement of changes in equity and consolidated statements of cashflow(together with their accompanying notes) for the half year ended 30 September 2011 and results of thebusiness, changes in equity and cash flows of the Group for the 6 months ended on that date, to be false ormisleading in any material aspect.

On Behalf of the Board of Directors

Xu Jian Zheng LeiExecutive Chairman Deputy Chairman and Chief Executive Officer

BY ORDER OF THE BOARD

CHEW KOK LIANGLOH SIEW LEESOH YEOW HWA

COMPANY SECRETARIES

14 November 2011

Documents

REA HY Results Announcement 141111