TIDMTNCI
RNS Number : 0210J
Tinci Holdings Ltd
24 June 2011
TINCI HOLDINGS LTD PRELIMINARY RESULTS
FOR THE 12 MONTHS ENDED 31 DECEMBER 2010
Tinci Holdings Ltd. ("Tinci", or the "Company", or the "Group"),
the AIM quoted China-based environmental engineering company, today
announces the Company's preliminary results for the twelve months
ended 31 December 2010 in accordance with International Financial
Reporting Standards (IFRS).
Financial Highlights:
-- Total revenue of RMB110.2 million (2009 - RMB178.1
million)
-- Loss before tax of RMB0.97 million (2009 - Profit of RMB2.13
million)
-- Loss after tax of RMB1.56 million (2009 - Profit of RMB1.20
million)
For further information, please visit www.tinciholdings.com or
contact:
Tinci Holdings Ltd
David Steeds, Chairman Tel: +44 (0)7836 578222
Joshua Cheng, Non-executive Director Tel: +1 512 577 4613
Westhouse Securities Limited
Tom Price / Martin Davison Tel: +44 (0) 20 7601 6100
About Tinci Holdings Limited
Tinci Holdings Ltd. is the parent company of Tinci Sanhe
Environmental Engineering Co. Ltd., an environmental engineering
company founded in October 2001, which is primarily involved in
developing, manufacturing and installing flue gas desulphurisation
(FGD) systems for reducing sulphur dioxide ("SO(2) ") emissions
from coal-fired power stations and large industrial boilers in
China.
Sulphur dioxide discharges rose 27% between 2000 and 2005 in
China, where air pollution is blamed for more than 400,000
premature deaths a year. China's State Environmental Protection
Administration (SEPA) has estimated that existing and new Chinese
plants will require total FGD investment of RMB 102 billion (c.
GBP10.1 billion) from 2006-2010, with the total investment required
expected to rise to RMB 190 billion (c. GBP18.9 billion) by
2020.
Tinci plans to use its technical capabilities to develop a
portfolio of businesses and services around the environmental
engineering services sector in China. The Company's shares are
traded on the AIM market of the London Stock Exchange under the
symbol 'TNCI'.
Chief Executive Officer's Review
Overview of Operating Performance
The Company was successful in winning five projects in the very
competitive market in 2010 with a contract value of RMB133.7
million, compared to four projects and a total contract value of
RMB132.6 million in 2009. Of the five projects won in 2010, three
employ conventional FGD technology and the other two employ SDA
technology from Niro of Denmark.
Sales revenue decreased 38% compared to2009 year, but receivable
collection was satisfactory during the year and cash flow remained
positive.
Because of the harsh competitive environment in FGD market in
China, after over a year's evaluation of the idea to adjust the
Company's long term strategy, the Company management concludes that
the Company will gradually transform itself from an engineering
company to a product-oriented company by concentrating on
developing processes involving the production of re-usable
by-products, such as sulphuric acid, as its mainline business. For
FGD business, the Company will focus on the petrochemical sector,
especially through China Oil, with whom it has close relations. The
Company hopes to achieve a breakthrough in its catalytic refinery
project with China Oil in 2011
The Company's order book at the end of 2010 amounted to RMB104.9
million (2009: RMB83.2 million). During 2011 the Company will
continue to aim to increase sales and accelerate receivable
collection so as to maintain a good cash flow, in the process
laying a solid foundation for developing new projects.
New Project Developments
1. PPC Bio-degradable Plastics Project
The Company announced in 2008 that it had been presented with an
opportunity by the Guangdong Provincial Government to enter into a
joint venture to exploit new polymerisation technology using a
newly-invented catalytic process to convert carbon dioxide into a
biodegradable plastic polymer. Over 200 million tonnes of plastic
are manufactured annually around the world, of which only a tiny
fraction is biodegradable. The market for biodegradable plastics is
very new. The joint venture partners are Tinci 43%, Guangzhou
Honsea Chemistry Co. Ltd. 45% and SUN YAT-SEN University 12%. The
joint venture is in the form of a Chinese limited company. An
initial investment of RMB9.8m was made by Tinci in 2007 to secure
the rights, acquire land and fund construction and plant.
A further investment of RMB7.84m was made in 2010 to bring the
registered capital of the Joint Venture to the required level.
Tinci's shareholding remains at 43% although it contributes 49% of
the capital as the University is not required to contribute
capital. During 2010 the Provincial Government grantedthe land for
the joint venture to use. However, as the JV's technological
progress has been slower than the Company planned and the
technology risk remains high, the Company is likely to postpone
further investment in this project until the technology is further
developed and verified.
2. MgO Project
In 2008 Tinci's wholly owned subsidiary, Guangzhou Tinci Sanhe
Environmental Engineering Co. Ltd., signed an agreement with Ducon
to utilise Ducon's magnesium oxide ("MgO") FGD technology ("MgO
Technology") for the engineering of selected FGD projects.
The MgO Technology agreement enables Tinci to offer its
customers a process which introduces benefits over existing
systems. These benefits include, inter alia, improved efficiency in
the removal of sulphur dioxide ("SO2.") which results in lower
operating costs for customers.
More importantly, a by-product of the MgO FGD process can be
recycled and used for the production of sulphuric acid. In recent
years, China has seen an increasing demand for sulphuric acid and,
to take full advantage of the demand, Tinci signed a letter of
intent with Chiping Xinfa Huaxing Aluminium to cooperate in its
manufacturing.
The FGD device for the first project in Guangxi has been
finished. However, since the letter of intent was signed, the
market price of sulphuric acid has fallen sharply in China as a
result of the economic slowdown. So the details of the next phase
for the production of sulfuric acid will be postponed until the
price of sulphuric acid rises to a level at which it can be
produced profitably.
3. Co-Operation with China Oil on Catalytic Refining Project
It is anticipated that one to two catalytic refining projects
will be developed in the second half of 2011 with China Oil, one of
China's major petrochemical companies. The progress under the
co-operation agreement with China Oil is so far satisfactory.
A similar agreement with Sinopec will not now be taken
forward.
4. Co-Operation with Nan Fang Alkali
A co-operation with Nan Fang Alkali to develop a new project
utilising waste alkali residue as the neutralising agent for FGD
projects was announced in 2009.
The results from this project with Nan Fang Alkali were
satisfactory in 2010and the joint venture is expected to become
profitable in 2011, somewhat later than expected last year.
Financial Performance
The total business income in 2010 was RMB 110.1 million which is
38% lower than in 2009. The loss after tax was RMB 1.56 million
(compared to a profit of RMB 1.20 million in 2009).
Revenue decreased during 2010 as the company was not able to win
sufficient work at profitable rates. However, the decline in
revenue was offset by firm control of operational costs.
Receivables decreased from RMB 220.6 million in 2009 to RMB
198.7 million in 2010 and payables decreased from RMB 164 million
in 2009 to RMB 160 million in 2010. The main reason for the
decrease in receivables was the fast collection of the receivables
from four projects - Jingyuan unit5 Gansu, Liwen, Dongguan and
Zhanjiang project -due to the projects' completion and excellent
operating performance.
The cash position improved from RMB 18.9 million in 2009 to RMB
21.1 million in 2010 mainly due to the timely collection of
receivables relating to those projects completed in prior
years.
Outlook
The Company expects FGD sales to be steady in 2011 as it adjusts
its business direction focusing its FGD business in China on the
petrochemical sector. The Company intends to concentrate on
developing processes involving the production of re-usable
by-products.
Meanwhile, the Company will concentrate more resources in
developing its new business opportunities, its MgO project and
catalytic refinery project with China Oil in hope of achieving a
breakthrough in one of these new businesses while maintaining a
stable income from FGD in 2011.
The Company plans to invest its cash reserve into fast
income-producing investment opportunities. In 2011, the Company is
researching an investment in manufacturing trichloroethene and
tetrachloroethene, the key raw materials for producing
refrigerating agent HFC-134a (tetrafluoroethane) which is an ozone
layer-friendly product to substitute the forbidden refrigerating
agent CFC-12 (dichlorodifluoromethane).
Staff and Management
I would like to thank all employees in the Company for their
hard work towards the development of the Company. I am also
grateful to our shareholders for their steady support and
understanding.
XU Jinfu
Chief Executive Officer
24 June 2011
Tinci Holdings Limited
Consolidated Income Statement
Year ended 31 December 2010
Note 2010 2009
RMB'000 RMB'000
Turnover 3 109,570 177,497
Other income 3 604 635
--------- ---------
110,174 178,132
Raw material and consumables used (90,791) (156,095)
Staff costs and staff benefits expenses (8,456) (8,942)
Depreciation and amortisation expense (2,572) (2,499)
Other operating expenses (8,819) (7,459)
--------- ---------
(Loss)/profit from operations (464) 3,137
Exchange loss (14) (231)
Finance costs (305) (756)
Share of losses of a jointly controlled
entity 13 (182) (25)
--------- ---------
(Loss)/profit on ordinary activities
before taxation 4 (965) 2,125
Taxation 5 (598) (926)
--------- ---------
(Loss)/profit for the year (1,563) 1,199
--------- ---------
Attributable to:
Shareholders of the company (1,563) 1,199
--------- ---------
RMB Cents RMB Cents
(Loss)/earning per share (basic and diluted) 7 (3) 2
Tinci Holdings Limited
Consolidated Statement of Comprehensive Income
Year ended 31 December 2010
2010 2009
RMB'000 RMB'000
(Loss)/profit for the year (1,563) 1,199
Other comprehensive (loss)/income
- Currency translation adjustments (33) 69
Total comprehensive (loss)/income for
the year (1,596) 1,268
------- -------
Total comprehensive (loss)/income attributable
to:
Shareholders of the company (1,596) 1,268
------- -------
Tinci Holdings Limited
Consolidated Statement of Financial Position
At 31 December 2010
2010 2009
Note RMB'000 RMB'000
Assets
Non-current assets
Land use rights 9 393 404
Property, plant and equipment 10 12,166 11,554
Intangible assets 11 6,125 7,256
Interest in an associate 12 24,990 9,800
Interest in a jointly controlled
entity 13 453 635
Deferred tax assets 21 6,012 5,630
------- -------
Total non-current assets 50,139 35,279
------- -------
Current assets
Amount due from customers for
contract work 14 24,170 55,307
Trade and other receivables 15 199,073 220,583
Derivative financial instrument 16 37 -
Restricted bank balances 17 6,454 2,052
Cash and bank balances 21,134 18,867
------- -------
Total current assets 250,868 296,809
------- -------
Total assets 301,007 332,088
------- -------
Liabilities
Current liabilities
Trade and other payables 18 157,636 163,544
Bills payable 19 - 2,607
Short-term bank loan - secured 20 - 15,000
Current income tax liabilities 653 6,539
------- -------
Total current liabilities 158,289 187,690
------- -------
Net assets 142,718 144,398
======= =======
Equity
Share capital 22 7,796 7,796
Share premium 18,078 18,078
Other reserves 43,193 43,310
Retained earnings 73,651 75,214
------- -------
Total shareholders' equity 142,718 144,398
======= =======
Tinci Holdings Limited
Consolidated Statement of Changes in Equity
Year ended 31 December 2010
Share Reverse
Share Share options acquisition Retained Translation
capital premium reserve reserve earnings reserve Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
(Note (Note (Note
22 ) 23 ) 24 )
Balance at 1
January 2009 7,796 18,078 836 42,644 74,015 362 143,007
Employee share
option scheme -
value of
employee
services - - 123 - - - 123
Total
comprehensive
income for
the year - - - - 1,199 69 1,268
Balance at 31
December 2009 7,796 18,078 959 42,644 75,214 293 144,398
------- ------- ------- ----------- -------- ----------- -------
Employee share
option scheme -
value of
employee
services - - (84) - - - (84)
Total
comprehensive
income for
the year - - - - (1,563) (33) (1,596)
Balance at 31
December 2010 7,796 18,078 875 42,644 73,651 (326) 142,718
======= ======= ======= =========== ======== =========== =======
Tinci Holdings Limited
Consolidated Statement of Cash Flow
Year ended 31 December 2010
2010 2009
RMB'000 RMB'000
--------------------------------------------- ------- -------
Cash flow from operating activities
--------------------------------------------- ------- -------
(Loss)/profit on ordinary activities before
taxation (965) 2,125
--------------------------------------------- ------- -------
Adjustments for:
Interest income (128) (159)
--------------------------------------------- ------- -------
Equity-settled share option expense (84) 123
--------------------------------------------- ------- -------
Interest expenses 305 756
--------------------------------------------- ------- -------
Depreciation and amortisation expense 2,572 2,499
--------------------------------------------- ------- -------
Unrealised gain on derivative financial
instruments (37) -
--------------------------------------------- ------- -------
Gain on disposal of property, plant and
equipment (98) -
--------------------------------------------- ------- -------
Impairment on derecognised of financial
assets 600 -
--------------------------------------------- ------- -------
Fair value change on holding derivative
financial instrument (37) -
--------------------------------------------- ------- -------
Share of losses of a jointly controlled
entity 182 25
--------------------------------------------- ------- -------
Operating profit before changes in working
capital 2,291 5,369
--------------------------------------------- ------- -------
Decrease in amount due from customers for
contract work 31,137 51,405
--------------------------------------------- ------- -------
Decrease/(increase) in trade and other
receivables 19,257 (77,754)
--------------------------------------------- ------- -------
(Decrease)/increase in trade and other
payables (8,418) 30,554
--------------------------------------------- ------- -------
Increase in bills payable - 1,195
--------------------------------------------- ------- -------
Cash generated from operations 44,267 10,769
--------------------------------------------- ------- -------
Interest received 128 159
--------------------------------------------- ------- -------
Interest paid (305) (756)
--------------------------------------------- ------- -------
Current income tax paid (6,867) (518)
--------------------------------------------- ------- -------
Net cash generated from operating activities 37,223 9,654
--------------------------------------------- ------- -------
Cash flow from investing activities
--------------------------------------------- ------- -------
Purchases of property, plant and equipment (41) -
--------------------------------------------- ------- -------
Purchase of derivative financial instrument (347) -
--------------------------------------------- ------- -------
Investment in an associate (7,840) -
--------------------------------------------- ------- -------
Loan to an associate (7,350)
--------------------------------------------- ------- -------
Proceed from sales of derivative financial
instrument 56 -
--------------------------------------------- ------- -------
Investment in a jointly controlled entity - (660)
--------------------------------------------- ------- -------
Net cash used in investing activities (15,231) (660)
--------------------------------------------- ------- -------
Cash flow from financing activities
--------------------------------------------- ------- -------
Proceeds from bank loan - 15,000
--------------------------------------------- ------- -------
Repayment of bank loan (15,000) (13,000)
--------------------------------------------- ------- -------
(Increase)/decrease in restricted bank
balances (4,401) 2,572
--------------------------------------------- ------- -------
Decrease in amount due to an associate (-) (7,350)
--------------------------------------------- ------- -------
Net cash used in financing activities (19,402) (2,778)
--------------------------------------------- ------- -------
Net increase in cash and cash equivalents 2,300 6,216
--------------------------------------------- ------- -------
Cash and cash equivalents as at 1 January 18,867 12,582
--------------------------------------------- ------- -------
Effect of foreign exchange rates changes
- net (33) 69
--------------------------------------------- ------- -------
Cash and cash equivalents as at 31 December 21,134 18,867
--------------------------------------------- ------- -------
ANALYSIS OF CASH AND CASH EQUIVALENTS
Cash and bank balances 21,134 18,867
--------------------------------------------- ------- -------
Major non-cash transactions:
During the year, the Group received an automobile from a trade
customer for the settlement of a trade balance amount of RMB2.6
million. The fair value of the automobile was RMB2 million
resulting in a loss on derecognition of financial assets of RMB600,
000.
Tinci Holdings Limited
Notes the financial statements
Year ended 31 December 2010
1. FINANCIAL INFORMATION
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the years ended 31
December 2010 or 2009. The statutory accounts for the year ended 31
December 2010 will be finalised on the basis of the financial
information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of
Companies.
2. TURNOVER, OTHER INCOME AND GAINS ANDSEGMENTAL REPORTING
The principal activities of the Group during the year were
developing, selling and installing large-scale flue gas
desulphurisation equipment to power stations.
For the years ended 31 December 2010 and 2009, the Group
comprised only one business and one geographical segment.
Turnover for the year is wholly attributable to construction
contract revenue for activities undertaken in China. An analysis of
the Group's other income and gains is set out below:-
Other income and gains
2010 2009
RMB'000 RMB'000
----------------------------------------- -------- --------
Rental income, net of tax 246 92
----------------------------------------- -------- --------
Interest income 128 159
----------------------------------------- -------- --------
Gain on disposal of motor vehicle 98 100
----------------------------------------- -------- --------
Write back of accruals - 261
----------------------------------------- -------- --------
Gains on sales of derivative financial
instruments 56 -
----------------------------------------- -------- --------
Fair value change of holding derivative
financial instruments 37 -
----------------------------------------- -------- --------
Miscellaneous 39 23
----------------------------------------- -------- --------
604 635
----------------------------------------- -------- --------
3. (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
2010 2009
This is arrived at after charging /
(crediting): RMB'000 RMB'000
------------------------------------------------- ----------- -----------
Auditor's remuneration 404 410
------------------------------------------------- ----------- -----------
Staff costs including directors' remuneration
------------------------------------------------- ----------- -----------
- Salaries and allowance 7,821 7,781
------------------------------------------------- ----------- -----------
- Contribution to defined contribution
retirement plans (note 8) 553 543
------------------------------------------------- ----------- -----------
- Other benefits 166 495
------------------------------------------------- ----------- -----------
- Employee share option benefits (note
23) (84) 123
------------------------------------------------- ----------- -----------
8,456 8,942
------------------------------------------------- ----------- -----------
Research and development expenses 539 440
------------------------------------------------- ----------- -----------
Amortisation of land use rights (note 9) 11 12
------------------------------------------------- ----------- -----------
Depreciation (note 10) 1,429 1,356
------------------------------------------------- ----------- -----------
Amortisation of intangible assets (note
11) 1,131 1,131
------------------------------------------------- ----------- -----------
Short term bank loan interest expenses 305 756
------------------------------------------------- ----------- -----------
Impairment of trade receivables 1,534 315
------------------------------------------------- ----------- -----------
4. TAXATION
The Group is subject to income tax on an entity basis on profits
arising in or derived from the jurisdictions in which the Group
entities are domiciled and operate.
The main operating subsidiary of the Group, Guangzhou Tinci
operating in the PRC, was subject to enterprise income tax ("EIT")
at 33%, of which 30% was state tax and 3% was local tax. Following
the change of the legal form ofGuangzhou Tinci from a domestic
enterprise to a wholly foreign-owned enterprise (WFOE) in 2006,
Guangzhou Tinci became subject to a foreign enterprise income tax
("FEIT") rate at 30%. Being a WFOE, starting from the first
profitable year, Guangzhou Tinci was entitled to a two-year
exemption from FEIT and a 50% reduction in its FEIT for the
subsequent three years ("Tax Holiday"). As such, Guangzhou Tinci
was exempted from FEIT for the two years ended 31 December, 2007
and subject to a reduced tax rate for the three years ending 31
December 2010.
On 16 March 2007, The National People's Congress approved the
Corporate Income Tax Law of the People's Republic of China (the
"New CIT Law"). The New CIT Law unified the FEIT and EIT with
reduced EIT rate from 33% to 25% with effect from 1 January
2008.
Under the New CIT Law mentioned above, entities currently
enjoying Tax Holiday will continue to enjoy it until it expires.
Guangzhou Tinci will be subjected to PRC enterprise income tax at a
rate of 12.5% for the fiscal years 2008 to 2010 and starting from
the fiscal year 2011 at the unified rate of 25%.
The Group is also subject to Hong Kong Profits Tax through the
Company and its subsidiary, World International. No provision for
Hong Kong Profits Tax has been made as the Company and World
International had no taxable income. The statutory rate of
corporate tax in Hong Kong is 16.5% (2009: 16.5%).
2010 2009
RMB'000 RMB'000
The tax charge comprises:
-------------------------------------- ---------------------------- --------
Current tax
-------------------------------------- ---------------------------- --------
PRC Enterprise Income Tax
-------------------------------------- ---------------------------- --------
- Current tax provided for the year 747 6,778
-------------------------------------- ---------------------------- --------
- Under-provision in prior years 233 (222)
-------------------------------------- ---------------------------- --------
980 6,556
-------------------------------------- ---------------------------- --------
Hong Kong Profits Tax - -
-------------------------------------- ---------------------------- --------
980 6,556
-------------------------------------- ---------------------------- --------
Deferred taxation (note 21):
Origination and reversal of temporary
difference (382) (5,630)
-------------------------------------- ---------------------------- --------
598 926
-------------------------------------- ---------------------------- --------
Deferred tax has been recognised in the financial statements due
to revenue and expenses recognised for financial reporting purposes
before being recognised for tax purposes.
5. EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share are calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year.
20 10 200 9
------------------------------------------------- ---------- ----------
(Loss)/profit attributable to equity holders
of the Company (RMB'000) (1,563) 1,199
------------------------------------------------- ---------- ----------
Weighted average number of ordinary shares
in issue 52,950,041 52,950,041
------------------------------------------------- ---------- ----------
(Loss)/earnings per share (RMB Cents per
share) (3) 2
------------------------------------------------- ---------- ----------
Diluted earnings per share
The Company has one category of dilutive instrument - share
options.
None of the share options of the Company in issue had a dilutive
effect on the basic earnings per share as the exercise price is
above the share price quoted in the AIM market throughout the year.
So they are considered as anti-dilutive and have not been included
in the diluted earnings per share calculation for the years ended
31 December 2010 and 2009.
22. SHARE CAPITAL
2010 2009
GBP GBP
Authorised:
140,000,000 ordinary shares of GBP0.01 each 1,400,000 1,400,000
RMB RMB
Issued and fully paid:
52,950,041 ordinary shares of GBP0.01 each 7,795,574 7,795,574
This information is provided by RNS
The company news service from the London Stock Exchange
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