Source - RNS
RNS Number : 2704L
China New Energy Ltd
30 September 2016
 

30 September 2016

 

China New Energy Limited

("China New Energy" "CNE" or "the Group")

 

 

Half-yearly report for the six months to 30 June 2016

 

China New Energy Limited (AIM: CNEL), the engineering and technology solutions provider to the bioenergy sector, announces its unaudited half-yearly results for the six months ended 30 June 2016.

 

Financial Highlights

·      Revenue of RMB 45.4m (H1 2015: RMB 26.7m), which represents a 70% increase over the same period last year

·      Gross profit of RMB 16.2m (H1 2015: RMB 3.06m)

·      Net Profit of RMB11.3m (H1 2015: loss of RMB5.54m)

·      Earnings per share of RMB 0.029 (H1 2015 loss of RMB 0.014)   

 

Operational Highlights

·      Maintenance and construction contracts secured in China in 2015 are being implemented and generating revenue 

·      Canadian contract in process of implementation and will be finalised in Q2

 

Yu Weijun, Chairman, commented:

 

"I am very pleased to report that the Company has made a profit in the first half of the year based upon contracts in from China, Myanmar and Canada that were secured in 2015 for implementation in 2016.

 

The bioenergy industry still faces many headwinds due to the low-oil price. However, our revised strategy is beginning to gain traction in both China and international markets and we look forward to continued successes."

 

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

 

Enquiries:

 

China New Energy Limited

www.chinanewenergy.co.uk

Richard Bennett

Tel: +44 (0)20 7148 3148 or [email protected]

Ivy Xu

Tel: +86 (0)20 8705 9371 or [email protected]



Cairn Financial Advisers LLP (NOMAD)

Tel: +44 20 7148 7900

Jo Turner / Sandy Jamieson 




Daniel Stewart and Co (Broker)

Tel: +44 20 7776 6550

David Lawman






Chairman's Statement

 

 

On behalf of the Board, I am very pleased to present the unaudited half-yearly results for the six month period ended 30 June 2016.

 

Financial Review

 

Revenue for the first six months of the year was up to RMB 45.4m (H1 2015:RMB 26.7m) an increase of approximately 70%. The Group's gross profit also increased in the period RMB 16.2m (H1 2015:RMB 3.06m) which resulted in the Group returning a net profit in the period of RMB 11.3m (H1 2015: loss of RMB 5.5m).

 

Selling and distribution expenses increased by 6.2% to RMB2.39m (H1 2015:RMB2.25m) while administrative expenses increased by 2.7% to RMB 4.76m (H1 2015: RMB 4.63m). The Group's other income were up to RMB 2.89m (H1 2015:RMB0.05m). The other expenses decreased by 56% to RMB 0.55m (H1 2015:RMB1.26m). Finance expense decreased to RMB0.14m (H1 2015:0.51m).

 

The turnaround from loss to profit is mostly attributed to a higher gross margin and to the continued implementation of contracts in China, Myanmar and Canada that were won in 2015.

 

 

Operational Review

                                                       

The Group principally provides EPC (Equipment, Procurement and Construction) services and VAS (Value Added Service) to ethanol and biobutanol producers. The EPC team primarily designs and builds commercial-scale biorefineries that convert feedstock into ethanol for both the biofuel and edible alcohol markets, whilst the VAS team provide services and technology to optimise the ethanol production at existing biorefineries.

 

CNE is a market leader in China at designing and building 1st Generation biorefineries that convert agricultural feedstock such as corn, cassava and sugarcane into ethanol. We have completed more than 100 1st Generation projects in China and around the world.

 

During the period, we completed an anhydrous alcohol EPC contract for our existing customer Jilin Buoda alcohol group with recorded revenue from this contract of RMB 10.6 million. The Company also won its first contract in Canada with BioNeutra North America Inc. and, during the period, manufactured and exported all of the equipment needed for the isomaltooligosaccharide production line. The total contract value was RMB 14.4 million (Excluding VAT:12.3 million) and we recorded revenue of RMB 8.2 million during the period. We are very pleased to advise that post period end, the equipment has now been installed and is being tested and we have now received more than 80% of the contract value as per the agreement. The project will be completed in H2.

 

These two top contracts constitute 42% of our total revenue, and the remaining revenue came from approximately 30 smaller maintenance and construction contracts in China and Myanmar.  

 

The Company continues to maintain our cooperation with South China University of Technology and SDIC Guangdong Bio-Energy Co., Ltd. We jointly undertake research and development projects including a project to advance 2nd generation pre-treatment technology that converts cellulosic (non-food) feedstock into bioethanol. This research project has been approved and funded by a grant from the Guangdong Provincial Department of Science and Technology. The company has received its full allocation of RMB 3.5 million which was recorded as other operating income.

 

 

Outlook

 

After a long downturn in the bioenergy market, mostly due the low oil price, we are beginning to see an increase demand for our products and services. This is attributed to the implementation of our strategy to diversify our product and service portfolio and to market to them to both domestic and international customers.

 

China remains an important participant in the global energy market and is very focussed on delivering renewable energy to both reduce emissions and increase energy security and reliance on importing fossil fuels. We note the country recently signed the Paris Climate Change Agreement, and we are optimistic that we will see an increased interest in biotechnology because it is widely considered to be one of the key alternatives to fossil fuel and a pathway to lower emissions. The company intends to continue its research and development activities in partnership with institutions including Guangzhou Institute of Energy Conversion ("GIEC"), part of the Chinese Academy of Sciences, to commercialise advanced alternative and renewable energy technologies for the bioenergy market. 

 

Internationally, we continue to promote our products and services through our partners. We continue to see an increased interest in our existing 1st generation bioenergy technology in emerging markets such as Africa and South East Asia. We also see an increased interest in 2nd generation bioenergy technology in developed markets which is also being aided by changes in the regulatory environment to support biofuel production. The encouragement of 2nd generation biofuel and regulatory changes are very welcome events as these help break down the inverse relationship between investment in biofuels and oil prices. We shall continue to update the market on developments on previously announced and new projects as they occur.

 

 

The Board are very pleased with our current progress and return to profitability. The board is also optimistic about the increased interest in the bioenergy sector and our pipeline of sales opportunities. However, we continue to maintain a cautious business approach due to the macro-economic climate and continued low-oil prices.

 

 

 

Yu Weijun

Chairman

 

30 September 2016

Consolidated
Statement of Financial Position



Unaudited


Unaudited


Audited

Six months to 30 June


Six months to 30 June


Year to 31 December



2016


2015


2015


Note

RMB'000


RMB'000


RMB'000

Non-current assets







Property, plant and equipment


4,921


6,995


5,887

Intangible assets


12,107


9,589


12,150

Trade receivables




3,523



Investments in subsidiaries









17,028


20,107


18,037








Current assets







Inventories


7,576


14,929


9,938

Due from customers for construction contracts


29,796


34,842


30,240

Trade and other receivables


97,524


43,152


43,152

Notes receivables




410



Cash and cash equivalents


19,918


13,802


19,426



154,814


122,395


102,756








Current liabilities







Trade and other payables


104,143


90,774


90,190

Due to customers for construction contracts


46,777


25,432


27,566

Notes payables







Income tax payable


8,783


9,208


8,776

Short-term borrowing









159,703


125,414


126,532








Net current assets/(liabilities)


-4,922


3,019


(23,776)








Non-current liabilities







Deferred tax liabilities




815







815










Net assets


12,106


16,273


(5,739)








Equity







Share Capital

2

1,445


1,325


1,357

Share premium


63,208


54,925


56,696

Combination reserve


(33,156)


(33,156)


(33,156)

Warrants reserve


1,673


1,673


1,673

Statutory reserve


12,328


12,328


12,328

Convertible bonds reserve







Own shares







Accumulated earnings/(losses)


(57,028)


(44,438)


(68,323)

Foreign currency translation reserve


23,636


23,616


23,686



12,106


16,273


(5,739)

 

 

 

Consolidated Statement of Comprehensive Income

 



Unaudited


Unaudited


Audited

Six months to 30 June 2016


Six months to 30 June 2015


Year to 31  December 2015


Note

RMB'000


RMB'000


RMB'000








Revenue


45,369


26,671


61,669

Cost of sales


(29,123)


(23,609)


54,002








Gross profit/(loss)


16,246


3,062


7,667








Other operating income


2,888


53


2,473

Selling and distribution expenses


(2,391)


(2,252)


(5,754)

Administrative expenses


(4,756)


(4,629)


(11,091)

Other operating expenses


(554)


(1,263)


(9,450)

Finance expenses


                     (138)


(512)


(891)

Bad debt provision(net)






(8,977)

Impairment loss






(400)

Other gains and losses




 










(Loss)/ Profit before income tax







11,295


(5,541)


(26,423)

Income tax expense






10

Deferred tax expenses




 


815








(Loss)/Profit for the financial period


11,295


(5,541)


(25,598)








Other comprehensive income:







Exchange difference


189


(21)


50



11,484


(5,562)


(25,598)

Total comprehensive income for the financial year





11,484


(5,562)


(25,598)

Total comprehensive income attributable to equity holder










Earnings/(loss) per share (RMB):







Basic

5

0.029


(0.014)


(0.065)

Diluted

5

0.029


(0.014)


(0.065)








 

 

 

Consolidated Statement of Cash flows

 



Unaudited


Unaudited


Audited

Six months to 30 June


Six months to 30 June


Year to 31 December



2016


2015


2015



RMB'000


RMB'000


RMB'000








Operating activities







Profit/(loss) before income tax


      11,295


           (5,541)


(26,423)

Adjustments for:







Depreciation and amortisation


(349)


1,688


2,409

 

Bad debt provision(net)






8,977

Loss/(gain) on disposal of property, plant and equipment


(26)




104

Loss/(gain) on disposal of financial assets







Interest income


(27)


(25)


(53)

Finance expense


562


537


535

Impairment loss






400

Exchange difference


(50)




28

Operating cash flows before movements in working capital

 

 

 

11,405


(3,341)


(14,023)








Decrease/(increase) in inventories


2,362


(3,088)


1,502

Construction work-in-progress


19,211


14,625


7,835

Trade and other receivables


(54,372)


(13,745)


(3,439)

Notes receivables


444


90



Trade and other payables


13,986


13,754


8,931

Decrease/(increase) in due to

customers for construction






13,526

 

Cash generated from/(used in) operations


 

(6,964)


 

8,295


 

14,332

Income taxes paid


7




10

Dividend received


 


 



Net cash from/(used in) operating activities


(6,957)


8,295


14,342








Investing activities







Proceeds from disposal of property, plant and equipment






Purchase of property, plant and equipment

1,694


(158)


(181)

Expenditure on intangible assets


(310)




(4,331)

 

Net cash from/(used in) investing activities

1,384


(2,234)


(4,512)

 


 



Financing activities






Short-term borrowing






Repayment of borrowings



(6,600)


(6,600)

Proceeds from issuance of shares

6,600


 -


1,803

Redemption of convertible bonds



 -



Interest received

27


25


53

Interest paid


(562)


(537)


(535)







Net cash from/(used in) financing activities

6,065


(7,113)


(5,279)



 



Net increase/(decrease) in cash and cash equivalents

492


(1,052)


4,551

Cash and bank balances at beginning of period

19,426


14,875


14,875

Effect of foreign exchange rate changes in cash and bank balances



(21)



Cash and cash equivalents at end of period

19,918


13,802


19,426

 

 

 


Consolidated Statement of Changes in Equity



Share capital


Share premium


Combination


Statutory reserve


Warrants reserve


Own shares


Accumulated earnings/ (losses)


Foreign currency translation reserve


Total



RMB'000


RMB'000


RMB'000


RMB'000






RMB'000


RMB'000


RMB'000

Balance at 31 December 2014


1,325


54,925


(33,156)


12,328


1,673



 

(38,895)

 

23,636

 

21,836

Profit for the period


-


-


-


-


-


-


(25,598)




(25,598)

Exchange difference arising on the translation


-


-


-


-


-


-




50


50

Correction of prior














(3,830)




(3,830)

Total comprehensive income for the period


-  


-  


-  


-  


-  


-  


(29,428)


50


(29,378)

Issue of shares, net of share issue costs

32


1,771














1,803

Shares granted to

Cancellation of EBT


















Balance at Dec. 2015


1,357


56,696


(33,156)


12,328


1,673



 

(68,323)

 

23,686

 

(5,739)

Profit for the period


-


-


-


-


-


-


11,295




11,295

Exchange difference arising on the translation


-


-


-


-


-


-




(50)


(50)

Total comprehensive income for the period


-  


-  


-  


-  


-  


-  


11,295


(50)


11,245

Issue of warrants















-


-  

Issue of shares, net of share issue costs

                 88-


                6,512












-


6,600-  

Transfer to statutory reserve















-


-  

Balance at 30 June 2016


1,445


63,208


-33,156


12,328


1,673



 

(57,028)

 

23,636

 

12,106

 

 


Notes to the Interim Financial Information - Period ended 30 June 2016

 

1. Basis of preparation

 

The financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union. The principal accounting policies used in preparing the interim results are those the Group expects to apply in its financial statements for the year ending 31 December 2016 and are unchanged from those disclosed in the Group's Report and Financial Statements for the year ended 31 December 2015, except for the following additional accounting policies:

 

Basis of consolidation

The Group includes the assets and liabilities of the Employee Benefit Trust ("EBT") within its Statement of Financial Position. In the event of the winding up of the Group, neither the shareholders nor the creditors would be entitled to the assets of the EBT.

 

Long-term incentive scheme charge

The fair value of the employee services received in exchange for the grant of shares or share options is recognised as an expense.

 

The total amount to be expensed over the performance period, from grant date to vesting date, is determined by reference to the fair value of the shares determined at the date the employee is deemed to be fully aware of their potential entitlement and all conditions of vesting.

 

Own shares

Company shares held by the EBT are deducted from the shareholders' funds and classified as Own Shares until such time as they vest unconditionally to participating employees and their families.

 

This interim financial information has not been reviewed or audited by the Group's auditors. The comparatives for the period ended 31 December 2015 are not the Group's full statutory accounts for that period but have been extracted from those financial statements. A copy of the statutory financial statements for that period, which were prepared under IFRS, has been delivered to the Companies Registry. The auditors' report on those accounts was unqualified.

 

Whilst the financial information included in this Interim Financial information has been prepared in accordance with the recognition and measurement criteria of IFRS, it does not include sufficient information to comply with IFRS.

 

This interim report was approved by the Board of directors on 30 September 2016.

 

 

2. Ordinary shares

 

 


 Number of Shares

 Share Capital

 Share premium



 £ '000

 RMB '000

 £ '000

 RMB '000

 As at 31st December 2010

                6,733,107

                    67

           1,013

           1,952

         29,354

 As at 21st March 2011 

              67,331,070

                    67

           1,013

           1,952

         29,354

 As at 6 May 2011

            269,324,280

                    67

           1,013

           1,952

         29,354







 Shares issued in connection with the Placing

                9,360,147

                       2

                24

               653

           6,756

 Share issued in settlement of fees to professional

                9,920,295

                       2

                26

               692

           7,160

 Share issued to EES Trustees International Limited 

                8,079,728

                       2

                21

               564

           5,832

 Shares issued to Citadel pursuant to warrant agreement

                7,932,412

                       2

                20

               305

           3,152

 Placing on 14 Dec 2011

                6,000,000

                       2

                14

               258

           2,650

Less share issue costs

-


-


(16,303)

 As at 31 December 2011

   310,616,862


    1,118


   38,601







Placing on 25 Sept 2012

6,000,000

2

15

59

601

Less share issue costs




(3)

(31)

 As at 31 December 2012

316,616,862


1,133


39,171

As at 30 June 2013

316,616,862


1,133


39,171

Placing on 4 Nov 2013

10,000,000

3

24

248

2,425

Less share issue costs




(17)

(171)







Placing on 25 Nov 2013

8,571,429

2

21

298

2,966

Less share issue costs




(21)

(209)







Placing on 26 Nov 2013

6,666,667

2

17

248

2,462







Placing on 29 Nov 2013

7,107,143

2

18

246

2,474







As at 31 December 2013

348,962,101


1,214


49,118







Placing on 29 Sept 2014

44,652,107

11

111

584

5,807







As at 31 December 2014

393,614,208


1,325


54,925







Placing on 29 Dec 2015

13,333,333

3

32

185

1,771

As at 31 December 2015

406,947,541


1,357


56,696







Placing on 9 June 2016

37,500,000

9

88

696

6,512

As at 30 June 2016

  444,447,541


1,445


63,208

 

 

 

The substantial shareholders have not changed from 31 May 2016 we outlined in the annual report.The Group has one class of ordinary shares which carry no right to fixed income.

 

 

3. Property, plant and equipment

 



Plant and machinery

Motor  Vehicles

Office   equipment

Leasehold improvements

Total



RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

As at 30 June 2016







 

Cost







 

At 1 January 2016


3,198

7,865

798

6,247

18,108

Additions


410

-

8

-

410

Disposals


-

(1,193)

-

(764)

                            (1,957) 








At 30 June 2016


3,608

6,362

806

5,483

16,259








Accumulated depreciation







At 1 January 2016


2,167

5,936

532

3,586

12,221

Charged for the year


1,208

(927)

42

(1,080)

(757)

Disposals


-

126

-

-

126





 



At 30 June 2016


3,375

4,883

574

2,506

11,338

 

 

Carrying amount







At 1 January 2016


1,031

1,929

266

2,661

5,887








At 30 June 2016


233

1,479

232

2,977

4,921

 

 

4. Intangible assets

 


Computer software

Patents

Technology Knowhow

Land use management

Development cost

Total


RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000








Cost







Balance at beginning of year

                     60

               2,908


               3,613

               6,914

       13,495 

Additions

                     -  

                  310

                  -  

                    -  

              

              310

Transfer

                     (50)

                    6,378

                  -  

                    (1,107)  

                    (6,815)

                   (1,594)  

Balance at end of year

                     10

               9,596

                  -  

               2,506

               99

            12,211




 

 



Accumulated amortisation







Balance at beginning of year

                     51

                  535


                  759

                    -  

             1,345

Amortisation for the year

                      (48)

                    (240)

                  -  

                  (728)

                 

                 (1,016)

Balance at end of year

                     3

                  295

                  -  

                  31

                  

              329

 

Carrying amount

 







As at 31 Dec 2015

                     15

                  978

                  -  

               2,937

               4,209

              8,139








As at 30 June 2016

                     7

               9,301

                  -  

               2,475

               99

              11,882

 

 

5. Earnings per share

 

Earnings per share ("EPS")on a basic and diluted basis are as follows:

 

Earnings per share ("EPS") on a basic and diluted basis are as follows:


Earnings

Weighted average number of shares

Earning per shares

Earnings

Weighted average number of shares

Earning per shares


Six months

Six months

Six months

Six months

Six months

Six months


to 30 June

to 30 June

to 30 June

to 30 June

to 30 June

to 30 June


2016

2016

2016

2015

2015

2015


Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited


RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

Earnings/(loss)per share-basic

11,484

401,723,797

0.029

(5,562)

393,614,208

(0.014)

Potentially dilutive shares

-

-

-

-


-

Earnings/(loss)per share-diluted

11,484

401,723,797

0.029

(5,562)

393,614,208

(0.014)

 

 

6. Directors' interests

 

The following Directors have held office during the period and their interests as at 30 June 2016, all of which are beneficial unless otherwise stated, whether direct or indirect, of the Directors and their families in the issued share capital of the company and options over Ordinary Shares which had been granted, are as follows:

 

Director


Number of Ordinary Shares


Percentage of Ordinary Shares

Yu Weijun


               90,932,440


20.46%

Tang Zhaoxing


               48,000,000


10.80%

Richard Bennett


-


-

 

7. Business Segment

 

A business segment is a Group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those of segments operating in other economic environments. 

 

The Group's revenue breakdown by geographical location is determined based on its customers' country of incorporation. The Group's cost of sales and operating expenses are aggregated on a cumulative basis and are not attributable to specific geographical regions. Therefore, a breakdown of gross profit for the financial years by geographical regions is not shown.

 

 

Geographical Segment

 Revenue

6 months ended


30 June 2016


30 June 2015

 


RMB'000


RMB'000

 





 

PRC

37,167


23,344

 

Myanmar



3,327

 

Canada

8,202


-

 





 





 


45,369


26,671

 





 

 

 

 

 

The CNE Group's assets, liabilities and capital expenditure are almost entirely attributable to a single business segment of provision of technology and engineering services to ethanol, ethanol downstream product and biobutanol producers.  Therefore, the CNE Group does not have separately reportable business segments under IFRS 8 Segmental Reporting


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

Related Charts

China New Energy (CNEL)

-0.05p (-3.33%)
delayed 15:41PM