Source - RNS
RNS Number : 7393K
MayAir Group PLC
26 September 2016
 

The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").  Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.


26 September 2016

 

MayAir Group plc

('MayAir' or the 'Group')

 

Interim Results for the six months ended 30 June 2016

 

MayAir Group plc (AIM: MAYA.L), a leading specialist provider of air purification technology, announces its interim results for the six months ended 30 June 2016 (the "period").

 

OPERATIONAL HIGHLIGHTS

 

·      The Group has strengthened its net cash position and has converted debtors into cash, delivering a $1.2 million improvement in MayAir's net cash position to $16.2 million (H1-2015: $15.0 million).

·      Order book developments during H1-2016 provided good visibility for FY-2016.  The Board expects FY-2016 to be second half weighted.

·      Currently more than US$49.2 million worth of secured projects within the H2-2016 pipeline. The Directors expect the vast majority of this pipeline will be fulfilled and recognised in the current financial year.

·      Over US$40 million of further projects tendered. 

·      Trading in July and August 2016 was encouraging, with over US$10 million of revenue generated.

·      Strong enhancement in H1-2016 operating margin, largely due to a higher sales mix from the commercial and replacement divisions.

·      During the year, the Group invested and set-up another PTFE filter production line, which has significantly increased its capacity.

 

FINANCIAL HIGHLIGHTS

 

 

 

Unaudited

H1 2016

(US$ million)

Unaudited

H1 2015

(US$ million)

Audited

FY 2015

(US$ million)





Revenue

19.0

31.6

63.6

Gross Profit

7.0

11.0

20.0

Operating Profit

1.5

4.4

8.1

EBITDA

2.0

4.9

9.0

Profit After Tax

1.3

3.4

6.3

EPS - Basic (US$ cent)

2.53

9.16

14.6

Gross Margin

37

35

32





Net Cash

16.2

15.0

14.9

Net Assets

47.7

44.7

47.3

 

 

Yap Wee Keong, Chief Executive Officer of MayAir Group, said:

"We are pleased with the Group's development in the first half of 2016.  Due to the timing of revenue recognition of our secured mega projects in the industrial division, the Group's results will be weighted towards the second half of the year. With a strong pipeline of secured projects, and responses awaited on over $40 million of projects which we have tendered for, we are well placed to finish 2016 strongly and to carry significant work into 2017.  Whilst it remains too early to predict the outcome for the full year, the Board is confident that the Group's results will be in line with market expectations.

 

"The trajectory of our sales growth for the commercial and replacement divisions has been encouraging, alongside our consistently leading platform of industrial air purification.  The combination of these revenue streams and associated pipeline opportunities provide a more even and predictable growth pattern in the longer term and improved operating margins moving forward.  The clean air market in which MayAir operates continues to be positive, particularly in China, with government policy encouraging investments in high-technology industries and greater adoption of clean air solutions to manage air pollution.  The Directors look forward to another year of revenue growth."

 

  For further information:

 

MayAir Group plc


Yap Wee Keong, Chief Executive Officer

Tel: +60 3 8961 2908

Koh Tat Seng, Chief Financial Officer

www.mayairgroup.com



Allenby Capital Limited (Nominated Adviser)

Tel: +44 (0) 20 3328 5656

David Hart / James Reeve

www.allenbycapital.com



Cantor Fitzgerald Europe (Broker)

Tel: +44 (0) 20 7894 7000

Andrew Craig / Richard Salmond

www.cantor.com



Media enquiries:


Buchanan


Henry Harrison-Topham / Victoria Hayns / Jane Glover

Tel: +44 (0) 20 7466 5000

[email protected]

www.buchanan.uk.com

 



 

About MayAir

 

Notes to Editors

 

Founded in 2001, MayAir Group is a leading specialist provider of air purification technology for use in industrial cleanrooms, supplying large multinational manufacturers including Sony, Continental and Bosch.  The Group's core business is in providing Fan Filter Units ("FFUs") air filtering equipment for use in industrial cleanrooms, an area in which MayAir has established itself as one of the leading providers in China.

 

In recent years, the Group has diversified its product offering to include indoor clean air solutions for the commercial and residential markets.  Key flagship commercial projects so far include Shanghai airport terminals, Shanghai International Convention Centre, SOHO Galaxy office development in Beijing and Chengdu's Subway.  MayAir is well positioned to take advantage of the growing demand for air purification technology and in the year to 31 December 2015, the Group reported record figures with revenue rising by 45% to US$63.6 million and underlying operating profit rising by 16% to US$8.1 million.  MayAir Group admitted to trading on AIM in May 2015 with the ticker MAYA.L.

 

For additional information please visit: www.mayairgroup.com

Operational Review

MayAir continues to pursue its objective of becoming a leading global provider in clean air solutions, primarily to the indoor market for use in industrial cleanrooms, commercial buildings and the growing residential market.  Building on MayAir's leading position of providing air purification solutions for industrial cleanrooms in China, the Group continues to expand its operation outside China.

 

Market Growth

MayAir's strategy is to focus on benefiting from the high growth in the Chinese market in parallel with its continued focus on international expansion. Currently, the market excluding China contributes less than 5% of total sales to the Group.  During H1-2016, intensified efforts were made to promote the MayAir brand, including participating in several major trade shows across Europe and South East Asia.  The Directors are confident that these marketing efforts will yield long term market growth from the ex-China market.

 

Industrial division

MayAir's customers for its industrial clean air solutions consist primarily of businesses that require cleanrooms as part of their own manufacturing processes, including technology companies, semiconductor manufacturers, pharmaceutical companies, hospitals and food & beverage businesses.

 

During H1-2016, the Industrial division continued to dominate the Group's revenue mix, contributing 58% of total revenue.  During the period, MayAir has successfully secured a number of large cleanroom projects in China with Tianma Micro-electronics Co., Ltd, BOE Technology Group, Chongqing HKC Optoelectronics Technology Co., Ltd and Nanchang O-film Tech Co., Ltd (as announced in June and July this year) which are expected to contribute positively in the second half of 2016.  The market outlook for the industrial sector remains positive, with the Chinese government and some emerging nations in Asia aggressively implementing policies that encourage and support investment in high technology related industries.

 

Commercial division

In the commercial market, MayAir provides clean air solutions for venues such as commercial office buildings, airports, subways, hotels, exhibition centres and schools.

 

The Commercial division contributed 13% of Group revenue in H1-2016 and registered growth of 20% compared to the same period in 2015.  Similar to the industrial division, MayAir has also secured sizeable contracts for this division that will also contribute positively in the second half of the year.  The Group remains confident in the pipeline of opportunities for this sector as demand for solutions continue to increase, especially in China, where the increased awareness of the impact of pollution on health is driving a requirement for clean air solutions in commercial environments.  The World Health Organization ('WHO') continues to identify air pollution as the world's largest single environmental health risk.  WHO reported in 2015 that every year, 4.3 million deaths occur from exposure to indoor air pollution and 3.7 million deaths are attributable to outdoor air pollution.

 



 

Replacement division

MayAir Group's strategy is to grow the Replacement division to provide long term stable recurring income. During H2-2015, the Directors of MayAir restructured this division and invested more resources into manpower to support the expected growth.

 

During H1-2016, MayAir saw encouraging levels of growth in the replacement division of 33% compared to the same period in 2015.  The Replacement division contributed 28% of the Group revenue in H1-2016.  MayAir intends to invest more manpower and systems to support greater future market growth in this division. The primary revenue from the Replacement division is derived from sales of replacement filters to customers who have installed the Group's industrial solutions.  As the Group continues to deploy more industrial projects throughout China and internationally, the Directors anticipate that the contribution from the Replacement division will increase accordingly.

 

Residential division

Market drivers in the Commercial division have driven the rationale for the Group establishing the Residential division, to improve health and quality of life.  MayAir's focus remains on developing unique solutions, adapted from its Commercial division, targeted at property developers looking for solutions for entire buildings, rather than the existing 'off the shelf' products for consumers.

 

MayAir expects the Residential division's contribution to the Group's revenues to remain relatively small compared with the Group's other divisions as it continues to seek strategic partners to grow this division. The Group is on track with its plan to generate sales in this division from 2017 onwards.

 

Product Development

To support its planned growth strategy, MayAir continues to invest in management and information systems to improve the Group's competitiveness in China and overseas.  In the first half of 2016, the Group successfully transitioned onto a new enterprise resource planning system, which has now integrated all core modules including the R&D Department. This supports the Group's investment in its proprietary Polytetrafluoroethylene ("PTFE") High Efficiency product line, which is targeted primarily at industrial cleanrooms.

 

Production Capacity Expansion

The construction of the new factory in Nanjing, China commenced during the latter part of H1-2016 and, as previously announced, the Group has successfully secured banking facilities of US$6 million (RMB40 million) to part finance the construction cost.  The total cost for the factory is estimated at US$12 million (RMB80 million), and will double the Group's manufacturing capacity, as well as providing additional space for R&D and new product development.

 

Production is on track to commence at the end of 2017.  The new factory will replace the existing factory and will almost double its size with total built up area of 38,700 square meters.  In anticipation of future higher demand for PTFE filters, the Group has proceeded to invest and add a new PTFE production line to increase capacity.

 

Financial Review

Due to a number of industrial mega projects being secured following the half year end, Group revenue for H1-2016 was US$19 million (H1-2015 - US$31.6 million).  This decrease is expected to be offset in H2-2016 by a combination of factors.  The Group has delivered projects totaling $10 million since the period end and this H2-2016 contribution is further supported by MayAir's secured pipeline which currently stands at US$49.2 million and which continues to grow.  The vast majority of this pipeline is expected to be fulfilled and recognised in the current financial year and, in addition, the Group awaits responses to over $40 million of projects which it has tendered for.  The Group's continued effort in promoting the Commercial and Replacement divisions has produced an encouraging performance for these divisions during H1-2016, with positive revenue growth of 20% and 33% respectively.

 

Gross margin of 37% was 2% higher than the comparative period (H1-2015: 35%).  This increase in gross margin reflected an improved sales mix from both the Commercial and Replacement divisions which generate higher margins than the Industrial division.  In H1-2016, operating and net profit after tax decreased in line with the lower sales recorded in the same period.

 

The Group's effective tax rate for H1-2016 is lower than the statutory tax rate of 15% due to the utilisation of deferred tax assets of certain subsidiaries.  The Group recorded earnings per share of 2.53 US$ cents in H1-2016, on a fully diluted basis.

 

Total cash increased by US$1.1 million to US$20.5 million as at 30 June 2016, of which US$14.8 million was held in fixed deposits.  The net cash position after debt stood at US$16.2 million as at 30 June 2016.  This is US$1.2 million higher than the US$15.0 million as at 31 December 2015, which reflects the Group's positive operating cashflow.



 

AIM Activity

The Group's admission to AIM has already had beneficial effects of enhancing MayAir's profile with existing and potential customers and supporting the development of the MayAir brand in Asia and internationally.  Funds raised at the time of admission to trading on AIM have strengthened MayAir's growth by increasing its ability to spend on R&D and to finance the construction of a new primary manufacturing facility.  In May 2016, the Group appointed Cantor Fitzgerald Europe as its broker.  During H1-2016 MayAir secured approval from shareholders to implement a share buy-back programme of up to 10% of the issued share capital. The buy-back programme was initiated on 8 August 2016 and it is the Directors' intention to reinitiate the programme imminently now that the close period under Regulation (EU) No 596/2014 (the Market Abuse Regulation) has ended.

 

Trading Outlook

The Group has been able to secure sizeable contracts in the first half of 2016.  Due to the timing of revenue recognition of our secured mega projects in the industrial division, the Group's results will be weighted to the second half of the year.  Whilst it remains too early to predict the outcome for the full year, the Board is confident that the Group's results will be in line with market expectations.

 

The trajectory of the Group's sales growth for the Commercial and Replacement divisions has been encouraging, alongside MayAir's consistently leading platform of industrial air purification.  The combination of these revenue streams and associated pipeline opportunities provide a more even and predictable growth pattern in the longer term and enhanced operating margins moving forward.  The clean air market in which MayAir operates continues to be positive, particularly in China with government policy encouraging investments into high-technology industry and also greater adoption of clean air solutions to manage air pollution.  The Group looks forward to another year of revenue growth.

 

Yap Wee Keong

Chief Executive Officer

26 September 2016

 



 

 

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2016

 




Unaudited

6 months

30 June 2016


Unaudited

6 months

30 June 2015


Audited

Year ended

31 December 2015


 

Note


USD'000


USD'000


USD'000

Revenue

9


19,006


31,598


63,622

Cost of sales



(12,008)


(20,615)


(43,611)

Gross profit



6,998


10,983


20,011









Other income



432


489


130

Selling and distribution expenses



(3,259)


(3,649)


(6,219)

Administrative expenses



(2,662)


(3,384)


(5,812)

Operating profit



1,509


4,439


8,110









Finance costs



(113)


(320)


(634)

Profit before taxation



1,396


4,119


7,476









Income tax expense

13


(149)


(765)


(1,216)

Profit after taxation



1,247


3,354


6,260








Other comprehensive income








Other comprehensive income to be  reclassified to

  profit or loss in subsequent  periods:






Foreign currency translation differences


(830)


(995)


(1,093)

Total comprehensive income for the period


417


2,359


5,167








Profit after taxation attributable to :-







Equity holders of the parent


1,011


2,862


5,208

Non-controlling interests


236


492


1,052



1,247


3,354


6,260








Total comprehensive income attributable to:-






Equity holders of the parent


587


1,962


3,481

Non-controlling interests


(170)


397


1,686



417


2,359


5,167

















Earnings per share:








Basic and diluted EPS (USD, cents)

14


2.53


9.16


14.62



 

Condensed Consolidated Statements of Financial Position

As at 30 June 2016

 



Unaudited

As at

30 June 2016


Unaudited

As at

30 June 2015


Audited

As at

31 December 2015


Note

USD'000


USD'000


USD'000

Non-current assets







Intangible assets


9


-


10

Plant and equipment


2,487


2,506


2,923

Land use rights


3,121


3,412


3,227

Construction in progress


206


-


-

Goodwill on consolidation


267


285


250

Trade receivables


4,005


6,184


5,002

Deferred tax assets


236


220


208


9

10,331


12,607


11,620















Current assets







Inventories


7,583


6,971


5,605

Amount due from contract customers


596


7,685


2,740

Trade receivables


21,172


15,015


23,119

Other receivables, deposit and prepayment


5,076


4,874


3,177

Fixed deposits with licensed banks

15

14,747


20,690


14,010

Cash and bank balances

15

5,731


5,265


5,349



54,905


60,500


54,000








Total Assets


65,236


73,107


65,620








Non-current liabilities







Hire purchase payables


74


42


84








Current liabilities







Trade payables


9,564


8,483


10,969

Other payables and accruals


3,292


8,761


1,878

Short term borrowings

18

4,213


10,960


4,312

Hire purchase payables


31


14


28

Income tax payable


361


52


1,064



17,461


28,270


18,251








Equity







Capital and reserves


43,208


40,900


42,622

Non-controlling interest


4,493


3,895


4,663



47,701


44,795


47,285















Total Equity and Liabilities


65,236


73,107


65,620








 

 


Condensed Consolidated Statements of Changes in Equity

For the six months ended 30 June 2016

 

 




< ------- Non-distributable --------> 

Distributable






Stated capital account

 

 

 

Merger reserves

Capital reserves

Foreign exchange translation reserves

Retained

profits

Equity attributable

to owners of

the subsidiaries

Non-controlling

interests

Total

equity

 



USD' 000

USD' 000

USD' 000

USD' 000

USD' 000

USD' 000

USD' 000

USD' 000

 











 

Balance at 1 January 2016


39,090  

(16,303)

2,181

(1,269)

18,923

42,622

4,663

47,285

 











 











 











 

Profit after taxation for the financial period


 -  

 -  

 -  

 -  

 1,011

1,011

236

1,247

 











 

Other comprehensive income for the financial period:










 

Foreign currency translation differences


 -  

 -  

 -  

 (424)

 -  

 (424)

 (406)

 (830)

 











 











 

Total comprehensive income for the financial period


 -  

 -  

 -  

 (424)

 1,011

587

 (170)

 417

 











 

Transfer to capital reserves


 -  

-  

 164

 -  

 (165)

 (1)

 -  

 (1)

 











 











 

Balance at 30 June 2016 and brought forward

  at 1 July 2016


 

39,090

 

(16,303)

 

2,345

 

(1,693)

 

19,769

 

43,208

 

4,493

 

47,701

 











 











 



Note 16

Note 17

              






 

 

Condensed Consolidated Statements of Changes in Equity (Cont'd)

For the six months ended 30 June 2016




< ------- Non-distributable ------>

Distributable






Stated capital account

 

 

 

Merger reserves

Capital reserves

Foreign exchange translation reserves

Retained

profits

Equity attributable

to owners of

the subsidiaries

Non-controlling

interests

Total

equity

 



USD' 000

USD' 000

USD' 000

USD' 000

USD' 000

USD' 000

USD' 000

USD' 000

 











 

Balance at 1 January 2015 (Pro forma)


-  

32

1,604

458

14,549

16,643

3,498

20,141

 











 

Group reconstruction


16,335

(16,335)

 -  

 -  

-  

-

-

-

 











 

Public issue:










 

- Issuance of new shares


 24,697

 -  

 -  

 -  

 -  

 24,697

 -  

 24,697

 

- Share issuance expenses


 (1,942)

 -  

 -  

 -  

 -  

 (1,942)

 -  

 (1,942)

 











 











 



 39,090

(16,303)

1,604

458

14,549

39,398

 3,498

 42,896

 











 











 

Profit after taxation for the financial period


 -  

 -  

 -  

 -  

 2,862

 2,862

 492

 3,354

 

Other comprehensive income for the financial period:










 

- Foreign currency translation differences


 -  

 -  

 -  

 (900)

 -  

 (900)

 (95)

 (995)

 











 











 

Total comprehensive income for the financial period


 -  

 -  

 -  

 (900)

 2,862

1,962

 397

 2,359

 











 

Transfer to capital reserves


 -  

-  

 292

 -  

 (752)

 (460)

 -  

 (460)

 











 











 

Balance at 30 June 2015 and brought forward

  at 1 July 2015


 

39,090

 

(16,303)

 

1,896

 

(442)

 

16,659

 

40,900

 

3,895

 

44,795

 











 











 



Note 16

Note 17







 


Condensed Consolidated Statements of Cash Flows

For the six months ended 30 June 2016

 


Unaudited

6 months

30 June 2016

USD' 000

Unaudited

6 months

30 June 2015

USD' 000

 

Audited

Year ended

31 December

2015

USD' 000





Cash flow from/(used in) operating activities




Profit for the period before taxation

1,396

4,119

7,476

Adjustment for:




Accretion of long term receivables

97

-

101

Allowance of impairment losses

9

17

67

Amortisation of intangible assets

1

1

1

Amortisation of land use rights

33

45

80

Depreciation of plant and equipment

474

409

881

Interest expense

100

156

667

Plant and equipment written off

-

-

1

Loss on disposal of plant and equipment

-

-

2

Unrealised gain on foreign exchange

(358)

(121)

(391)

Interest income

(70)

(2)

(86)

Write back of allowance for Impairment losses

-

-

(185)

Operating cash flows before movements in working capital

1,682

4,624

8,614

Decrease in amount due from contract customers

2,144

9,132

13,001

(Increase)/Decrease in inventories

(1,978)

2,063

3,047

Decrease/(Increase) in trade and other receivables

1,197

(1,917)

(8,629)

Increase/(Decrease) in trade and other payables

11

(15,441)

(19,758)

Cash from/(used in) operating activities

3,056

(1,539)

(3,725)





Interest paid

(100)

(156)

(667)

Income tax paid

(880)

(184)

158

Net cash from/(used in) operating activities

2,076

(1,879)

(4,234)





 

Cash flows (used in)/from investing activities




Purchase of intangible assets

-

-

(10)

Purchase of plant and equipment

(73)

(280)

(1,445)

Construction in progress

(206)

-

-

Proceeds from disposal of plant and equipment

-

-

41

Interest received

70

2

86

Net cash inflow from acquisition of a subsidiary

-

7,370

-

Increase in equity interests in subsidiary companies

-

-

(361)

Net cash (used in)/ from investing activities

(209)

7,092

(1,689)

 

 



 

Condensed Consolidated Statements of Cash Flows (Cont'd)

For the six months ended 30 June 2016

 




 


Unaudited

6 months

30 June 2016

USD' 000

Unaudited

6 months

30 June 2015

USD' 000

Audited

Year ended

31 December

2015

USD' 000

 

Cash flows (used in)/from financing activities




Dividends paid by a subsidiary to non-controlling interests

-

-

(182)

Drawdown of short-term loans

1,984

4,029

14,774

 

Drawdown of hire purchase

-

-

90

 

Repayment of short-term loans

(1,984)

(4,835)

(15,886)

 

Repayment of hire purchase

(19)

(4)

(18)

 

Repayment to related parties

-

-

(787)

 

Proceeds from issuance of shares, net of share issuance expenses

-

22,755

22,755

 

Net cash (used in)/from financing activities

(19)

21,945

20,746

 





 

Effects of foreign exchange translation

(729)

(1,203)

(1,277)

 





 

Net increase in cash and cash equivalents

1,119

25,955

13,546

 





 

Cash and equivalent at beginning of period

19,359

-

5,813

 

Cash and equivalent at end of period

15

20,478

25,955

19,359

 





 



 

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION

For the six months ended 30 June 2016

 

1.         GENERAL INFORMATION

 

MayAir Group plc ("the Company" or "the Group") was incorporated as a public limited company in Jersey with its registered office at 12 Castle Street, St. Helier, Jersey JE2 3RT, Channel Islands.  The Company has its primary listing on the AIM market of the London Stock Exchange.  The Company's nature of operations is to act as the holding company of a group of subsidiaries that are involved in production, marketing and distribution of clean air products and equipment and provision of related services.

 

The condensed consolidated interim financial report has been prepared on a historical cost basis, with the fair value method being used if it is relevant.

 

The directors do not recommend the payment of an interim dividend.

 

This condensed interim financial report was approved by the Board of Directors for issue on 26 September 2016.

 

 

2.         ACCOUNTING POLICIES

 

            2.1        BASIS OF PREPARATION

 

The condensed unaudited interim financial statements for the six months ended 30 June 2016 have been prepared in accordance with IAS 34, "Interim Financial Reporting" and historical costs basis.  They do not include all the information required for a complete set of IFRS financial statements.  However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at the year ended 31 December 2015.  The results for the period ended 30 June 2016 are unaudited.

 

The condensed unaudited consolidated financial statements for the period ended 30 June 2016 have adopted accounting policies consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2015.

 

In accordance with IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, in developing an appropriate accounting policy for the group reconstruction in which the Company became the holding company of the Group, the Directors considered the pronouncements of other standard setting bodies and specifically looked to accounting principles generally accepted in the United Kingdom ("UK GAAP") for guidance (FRS 6 - Acquisitions and Mergers) which does not conflict with IFRS and reflects the economic substance of the transaction.

 

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and in some cases have not yet been adopted by the EU.

 

The condensed unaudited consolidated financial statements for the period ended 30 June 2016 have been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future.

 

The condensed unaudited consolidated financial statements for the period ended 30 June 2016 are presented in United States Dollar ("USD"), which is the presentation currency for the consolidated annual financial statements. All financial information presented in USD has been recorded to the nearest thousand.

 



 

            2.2        BASIS OF CONSOLIDATION

 

The condensed unaudited consolidated financial information for the period ended 30 June 2016 includes the financial information of the subsidiaries made up to the end of the reporting periods.  The consolidated financial information includes the assets and liabilities of the MayAir Group plc Employee Benefit Trust ("EBT") within its Statement of Financial Position. In the event of the winding up of the Company, neither the shareholders nor creditors would be entitled to the assets of the EBT.  The cost of ordinary shares held by the EBT is deducted from shareholders' funds and classified as 'Own Shares' until such time as they vest unconditionally to participating employees.  At 30 June 2016 the EBT held 2,554,650 ordinary shares in the Company at a cost of USD nil.

 

 

3.         SEASONAL OR CYCLICAL FACTORS

 

 In light of the recently announced sizeable projects secured in later part of first half of 2016, the performance of the Group is expected to be second half weighted.

 

 

4.         ITEMS OF AN UNUSUAL NATURE

 

There were no unusual items affecting assets, liabilities, equity, net income or cash flows due to their nature, size or incidence for the financial period ended 30 June 2016.

 

 

5.         SIGNIFICANT EVENTS

 

(a)  On 25 January 2016, the Company incorporated a wholly-owned subsidiary in Singapore called MayAir Singapore Pte. Ltd. ("MayAir Singapore").  The principal activity of MayAir Singapore is that of sales and distribution of air filters and its related technical services. Its initial paid-up capital is SGD100,000.

 

(b)  On 24 February 2016, the Company incorporated a wholly-owned subsidiary in Hong Kong called MayAir (HK) Pte. Limited. ("MayAir HK").  The principal activity of MayAir HK is that of an investment holding company.  Its initial paid-up capital is HK$2.

 

 

6.         MATERIAL CHANGES IN ACCOUNTING ESTIMATES

 

The preparation of the unaudited interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses for the current and its corresponding financial period under review.  Actual results may differ from these estimates.

 

In preparing the unaudited interim financial report, the significant judgements made by the management in applying the Group's accounting policies and the sources of estimates uncertainty were consistent as to those applied to the 2015 audited financial statements.

 

There were no changes in estimates of amounts of the Group that may have a material effect on the financial period ended 30 June 2016.

 

 

7.         ISSUANCE AND/ OR REPAYMENT OF DEBT AND EQUITY INSTRUMENTS

 

There was no issuance, repurchase and/ or repayment of debt and equity instruments for the financial period ended 30 June 2016 except for subsequent share buy-back programme as referred to in Note 10 of this report.

 

 

8.         DIVIDENDS

 

No interim dividend was recommended by the directors in respect of the financial period under review.

 

 

9.         OPERATING SEGMENTS

 

Operating segments are prepared in a manner consistent with the internal reporting provided to management as its chief operating decision maker in order to allocate resources to segments and to assess their performance.

 

Information on business segments is not presented as the Group operates mainly in production, marketing and distribution of clean air products and equipment and provision of related services, and 93% of its assets are situated in, and 97% of its revenues are derived from, operations in the People's Republic of China.

 

Geographical Segments

The analysis of the Group's revenue by geographical segments based on customers' locations is as follows:-


 

Unaudited

6 months ended

30 June 2016


 

Unaudited

6 months ended

30 June 2015


 

Audited

Year ended

31 December 2015


USD'000


USD'000


USD'000

 







 

PRC

18,430


30,382


61,203

 

Others

576


1,216


2,419

 


19,006


31,598


63,622

 

 

 

Non-Current Operating Assets

 

 

 

 

 

Unaudited

6 months ended

30 June 2016


 

Unaudited

6 months ended

30 June 2015


 

Audited

Year ended

31 December 2015


USD'000


USD'000


USD'000

 







 

PRC

9,644


11,993


11,015

 

Others

687


614


605

 







 


10,331


12,607


11,620

 

 

 



 

10.        SUBSEQUENT EVENTS

 

There were no significant events subsequent to the end of the current financial period up to the date of this report that have not been reflected in the interim financial report for the current period under review except as below:

 

On 5 August 2016, the Company announced that it has commenced a share buy-back programme following the approval granted by its shareholders at the annual general meeting of the Company held earlier this year.  The buy-back will be for up to a maximum of 4,247,500 ordinary shares of no par value in the Company, representing approximately 10% of the Company's issued share capital, for an aggregate maximum consideration of £5,755,750.  MayAir has engaged its broker, Cantor Fitzgerald Europe, to undertake the buy-back on its behalf.  The shares purchased by the Company will be held as treasury shares.

 

As of the date of this report, the Company had purchased:-

 

 

Transaction date

Number of shares

purchased

Average price per share

(£)

Amount

(£)





8th August 2016

150,000

48.00 pence

£72,000.00

17th August 2016

100,000

60.24 pence

£60,240.00

Number of treasury shares

 

250,000

 

52.90 pence

 

£132,240.00

 

 

 

11.        CHANGES IN CONTINGENT LIABILITIES AND CONTINGENT ASSETS

 

There were no major contingent liabilities and contingent assets that had arisen during the interim financial period ended 30 June 2016.

 

 

12.        CAPITAL COMMITMENTS

 



 

Unaudited

6 months

ended

30 June 2016


 

Unaudited

6 months

ended

30 June 2015


 

Audited

Year

ended

31 December 2015


 

 


USD' 000


USD' 000


USD' 000


 

Authorised but not contracted for







 

Construction of factory

37,388


43,723


43,723


 

Contracted but not provided for






Construction of factory

6,335


-


-

 

 



 

13.        TAXATION

 

The taxation charge for the period is based on management's best estimate of the Group's weighted average annual tax rate (at its prevailing tax legislation) expected for the full financial year.

 

The Group's effective tax rate for the six months ended 30 June 2016 of 10.7% is lower than the statutory tax rate of 15% due to the utilisation of deferred tax assets for certain subsidiaries.

 

A subsidiary of the Group, MayAir Technology (China) Co., Ltd., has been granted a 15% exemption on corporate tax up to 31 December 2016 by State Revenue Department of Jiangsu under the "Hi-Technology Industry Incentive".

 

 

14.        EARNINGS PER SHARE

 

The calculation of basic earnings per ordinary share at 30 June 2016 was based on the profit attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding as follows:

 


 

Unaudited

6 months

ended

30 June 2016


 

Unaudited

6 months

ended

30 June 2015


 

Audited

Year ended

31 December

2015







 

Profit after taxation attributable to owners

of the Company (USD' 000)

 

1,011


 

2,862


 

5,208

 







 

Weighted average shares in issue for basic 

 and diluted ('000)

 

39,920


 

31,236


 

35,614

 

Basic and diluted earnings per share

(USD, cents)

 

2.53


 

9.16


 

14.62

 

 

The calculation of the weighted average number of shares exclude shares held by the EBT.

 

 

15.        CASH AND BANK BALANCES

 

            For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:-

 



Unaudited

6 months

ended

30 June 2016


Unaudited

6 months

ended

30 June 2015


Audited

Year ended

31 December

2015


 

 


USD' 000


USD' 000


USD' 000


 

Fixed deposits with licensed banks

14,747


20,690


14,010


 

Cash and bank balances

5,731


5,265


5,349


 

Cash and cash equivalents

20,478


25,955


19,359


 

 



 

15.        CASH AND BANK BALANCES (CONT'D)

 

The Chinese Renminbi is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Group is permitted to exchange Chinese Renminbi for foreign currencies through banks that are authorised to conduct foreign exchange business.

 

Included in the deposits placed with the licensed banks is USD149,000 (30 June 2015 - USD157,000; 31 December 2015 - USD156,000) of Group funds pledged for a bank facility granted to a subsidiary.

 

Included in the cash and bank balances is an amount of USD793,000 (30 June 2015 - USD2,633,000; 31 December 2015 - USD1,746,000) of funds being set aside as deposit guarantees granted to customers and suppliers.

 

The cash and bank balances of the Group in the PRC amounting to USD4,614,000 (30 June 2015 - USD4,117,000; 31 December 2015 - USD4,132,000) are subject to exchange control restrictions.

 

 

16.        STATED CAPITAL ACCOUNT


The Company

6 months ended

30 June 2016


No. of shares


USD'000


Issued and Fully Paid-Up


1 January 2016/ 30 June 2016

42,475,000


39,090


 

The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the Company.

 

 

17.        MERGER RESERVE

 

Accounting for group reorganisations is scoped out of IFRS 3. Accordingly, as required under IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors the Group referred to current UK GAAP to assist its judgement in identifying a suitable accounting policy to apply in accounting for the group reorganisation in which the Company became the holding company of the Group.  The introduction of the new holding company has been accounted for as a capital reorganisation using the merger accounting principles prescribed under current UK GAAP.  Therefore the consolidated financial statements of MayAir Group Plc are presented as if MayAir Group Plc had always been the holding company for the Group.

 

The use of merger accounting principles has resulted in a balance on Group capital and reserves that has been classified as a merger reserve and included in shareholders' funds.  The consolidated interim financial report includes the results of the Company and all its subsidiary undertakings made up to the same accounting date.

 

 

18.        SHORT TERM borrowings


Unaudited

6 months

ended

30 June 2016


Unaudited

6 months

ended

30 June 2015


 

Audited

Year ended

31 December 2015



USD'000


USD'000


USD'000









Short-term borrowings

4,213


10,960


4,312


 

The short term borrowings bore interest ranging from 4.35% to 6.72% (30 June 2015 - 5.87% to 6.72%, 31 December 2015 - 4.35% to 6.72%) per annum at the end of the interim financial period.

 

- Ends -

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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