2013-11-21 10:02:06
C&G ENVIRONMENTAL PROTECTION HOLDINGS LIMITED
Third Quarter Results and Dividend Announcement for the Period Ended 30 September 2013
The Board of Directors are pleased to announce the consolidated results of the Group for the three
months ended 30 September 2013. The figures presented below have not been audited.
PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3),
HALF-YEAR AND FULL YEAR RESULTS
1(a)(i) An income statement and statement of comprehensive income, or a statement of
comprehensive income, for the group, together with a comparative statement for the
corresponding period of the immediately preceding financial year.
% %
2013 2012 Increase / 2013 2012 Increase /
HK$'000 HK$'000 (Decrease) HK$'000 HK$'000 (Decrease)
Revenue 163,70 0 93,777 74.56 417,374 452,846 (7.83)
Cost of sales ( 116,774) ( 42,643) 173.84 ( 263,711) ( 331,603) (20.47)
Gross profit 4 6,926 51,134 (8.23) 153,663 121,243 26.74
Other income 1 5,785 1 ,660 850.90 29,179 3 ,355 769.72
Administrative expenses ( 19,811) ( 19,976) (0.83) ( 60,057) ( 61,602) (2.51)
Other operating (expenses)/income ( 3,912) 1 ,109 452.75 ( 3,912) ( 12,734) (69.28)
Profit from operations 3 8,988 33,927 14.92 118,873 50,262 136.51
Finance costs ( 31,337) ( 27,331) 14.66 ( 91,417) ( 78,046) 17.13
Profit/(loss) before taxation 7 ,651 6 ,596 15.99 27,456 ( 27,784) 198.82
Income tax expense ( 3,282) ( 4,143) (20.78) ( 4,749) ( 7,902) (39.90)
Net profit/(loss) attributable to the
owners of the Company 4 ,369 2 ,453 78.11 22,707 ( 35,686) 163.63
Other comprehensive income
Exchange difference on translating
foreign operation 1 1,044 ( 3,145) 451.16 45,585 4 ,137 1,001.89
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD 1 5,413 ( 692) 2,327.31 68,292 ( 31,549) 316.46
three months ended 30 September nine months ended 30 September
2
1 (a)(ii) Explanatory Notes:
Other income comprises:
The Group
three months ended 30 September nine months ended 30 September
2013 2012 2013 2012
HK$’000 HK$’000 HK$’000 HK$’000
Interest income 551 811 810 1,296
Exchange gain 4 3 39 4
(Loss)/gain on disposal of fixed
assets
(1)
-
25
5
Government grants 378 368 1,257 758
Refund of value added tax 6,605 252 18,057 356
Deferred income 267 200 794 601
Fair value gain on financial liabilities
at fair value through profit or loss
110
-
215
-
Reimbursement income from a
contractor
7,482
-
7,482
-
Sundry income 389 26 500 335
15,785 1,660 29,179 3,355
Profit from operations is arrived at after charging:
The Group
three months ended 30 September nine months ended 30 September
2013 2012 2013 2012
HK$’000 HK$’000 HK$’000 HK$’000
Loss on disposal of fixed assets - 23 - 27
Depreciation and amortisation 33,488 22,396 99,172 76,730
Interest on bank loans 31,326 27,331 91,393 78,046
Interest on finance lease 11 - 24 -
3
1(b)(i) A statement of financial position (for the issuer and group), together with a
comparative statement as at the end of the immediately preceding financial year.
30.9.2013 31.12.2012 30.9.2013 31.12.2012
HK$'000 HK$'000 HK$'000 HK$'000
Non-current assets
Fixed assets 9,25 7 9 ,211 - -
Intangible assets 4 ,059,163 3 ,944,712 - -
Investment in a jointly controlled entity 7 1 - - -
Investment in subsidiaries - - 575,396 575,396
4,068,491 3,953,923 575,396 575,396
Current assets
Inventories 6 ,049 3 ,612 - -
Trade receivables 140,203 145,557 - -
Gross amounts due from customers
for contract work
354,470 458,168 - -
Other deposits and other receivables 141,657 137,328 - 7
Trade deposits and prepayments 3 1,602 1 1,452 - -
Due from subsidiaries - - 906,203 906,203
Pledged bank deposits 4 5,138 4 5,105 - -
Bank and cash balances 352,797 9 ,993 1 13 2 1
1,071,916 811,215 9 06,316 9 06,231
TOTAL ASSETS 5,140,407 4,765,138 1 ,481,712 1 ,481,627
Capital and reserves
Share capital 9 7,302 9 7,302 9 7,302 9 7,302
Reserves 1,682,821 1,614,149 1 ,375,002 1 ,378,593
Equity attributable to owners of the
Company
1,780,123 1,711,451 1 ,472,304 1 ,475,895
Non-current liabilities
Interest-bearing borrowings - secured 2,177,985 1,862,701 - -
Finance lease payables 9 17 3 34 - -
Deferred income 2 3,880 1 8,613 - -
Deferred tax liabilities 8 6,099 7 9,120 - -
2,288,881 1,960,768 - -
Current liabilities
Trade payables 2 7,364 1 9,514 - -
Gross amounts due to customers for
contract work
1 8,383 3 3,463 - -
Accruals and other payables 424,275 626,826 1 ,390 1 ,401
Due to a subsidiary - - 8 ,018 4 ,116
Deferred income 1 ,070 8 01 - -
Financial liability at fair value through
profit or loss
- 2 15 - 2 15
Finance lease payables 7 1 8 0 - -
Interest-bearing borrowings - secured 599,165 410,973 - -
Current tax liabilities 1 ,075 1 ,047 - -
1,071,403 1,092,919 9 ,408 5 ,732
Total liabilities 3,360,284 3,053,687 9 ,408 5 ,732
TOTAL EQUITY AND LIABILITIES 5,140,407 4,765,138 1 ,481,712 1 ,481,627
The Group The Company
4
1(b)(ii) In relation to the aggregate amount of the group's borrowings and debt securities,
specify the following as at the end of the current financial period reported on with
comparative figures as at the end of the immediately preceding financial year.
Amount repayable in one year or less, or on demand
As at 30 September 2013 As at 31 December 2012
Secured
(HK$’000)
Unsecured
(HK$’000)
Secured
(HK$’000)
Unsecured
(HK$000)
599,165 Nil 410,973 Nil
Amount repayable after one year
As at 30 September 2013 As at 31 December 2012
Secured
(HK$’000)
Unsecured
(HK$’000)
Secured
(HK$’000)
Unsecured
(HK$’000)
2,177,985 Nil 1,862,701 Nil
Details of any collateral
At 30 September 2013, the banking facilities of the Group were secured by the following:
The pledge of the Group’s intangible assets of approximately HK$4,059,163,000.
5
1(c)(i) A statement of cash flows (for the group), together with a comparative statement for
the corresponding period of the immediately preceding financial year.
2013 2012 2013 2012
HK$'000 HK$'000 HK$'000 HK$'000
CASH FLOW FROM OPERATING ACTIVIES
Profit/(loss) before tax 7,65 1 6 ,596 27,456 ( 27,784)
Adjustments for:
Depreciation and amortisation 33,488 2 2,396 99,172 76,730
Interest expenses 31,337 2 7,331 91,417 78,046
Profit from construction services - (70) ( 414) ( 17,217)
Amortisation of deferred income ( 267) (200) ( 794) ( 601)
Interest income ( 551) (811) ( 810) ( 1,296)
(Gain)/loss on financial liability at fair value through profit or loss ( 110) (1,109) ( 215) 8 02
Written off of intangible asset - - - 11,932
Written off of construction in progress and fixed assets 3,912 - 3 ,912 -
Share based payment expense 247 - 3 80 -
Net loss/(gain) on disposal of fixed asset 1 23 (25) 2 2
Operating profit before working capital changes 75,708 5 4,156 220,079 120,634
Decrease/(increase) in inventories 907 (587) ( 2,437) ( 752)
(Increase)/decrease in trade receivables (15,122) (29,948) 5 ,354 ( 75,122)
Decrease/(increase) in other deposits and other receivables 7,532 4 4,199 ( 4,329) ( 10,365)
(Increase)/decrease in trade deposits and prepayments (12,014) 197 ( 20,150) ( 2,425)
Increase in trade payables 1,831 5 ,118 7 ,850 6 ,763
Increase in deferred income 1,041 612 6 ,819 6 12
Decrease in accruals and other payables (22,814) (30,363) ( 15,718) ( 23,580)
Cash generated from operations 37,069 4 3,384 197,468 15,765
Interest paid (45,553) (52,553) ( 120,826) ( 128,370)
Net cash (used in)/generated from operating activities (8,484) (9,169) 76,642 ( 112,605)
CASH FLOWS FROM INVESTING ACTIVITIES
Refund/(payment) for construction work for BOT projects 31,224 ( 104,138) ( 78,081) ( 388,635)
Investment in a jointly controlled entity ( 71) - (71) -
Proceeds from disposal of fixed assets 50 13 1 00 3 4
Purchase of fixed assets ( 322) (521) ( 1,663) ( 1,458)
Interest received 551 811 8 10 1 ,296
Net cash generated from/(used in) investing activities 31,432 ( 103,835) ( 78,905) ( 388,763)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid - - - ( 4,035)
(Decrease)/increase in amount due to contractors ( 24,892) 25,515 ( 67,294) 6 7,845
Repayment from a contractor - 197,876 - 1 97,876
(Repayment to)/advance from related parties ( 66,695) (137,984) ( 56,515) 4 ,614
Decrease/(increase) in pledge bank deposits 31,469 16,492 ( 33) ( 3,331)
Repayment of finance lease payable ( 37) - ( 85) -
Repayment of interest-bearing borrowings ( 117,141) (48,743) ( 310,306) ( 111,686)
Advances of Interest-bearing borrowings 505,430 56,214 7 45,630 3 40,577
Net cash generated from financing activities 328,134 109,370 3 11,397 4 91,860
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 351,082 (3,634) 3 09,134 ( 9,508)
EFFECT ON FOREIGN EXCHANGE RATE CHANGE ( 19,534) 3,771 3 3,670 8 ,665
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE
FINANCIAL PERIOD 21,249 10,032 9 ,993 1 1,012
CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL 352,797 10,169 3 52,797 1 0,169
ANALYSIS OF THE BALANCES OF CASH AND CASH
Bank and cash balances 352,797 10,169 3 52,797 1 0,169
Group Group
nine months ended 30
September
three months ended 30
September
6
1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii)
changes in equity other than those arising from capitalisation issues and distributions to
shareholders, together with a comparative statement for the corresponding period of the
immediately preceding financial year.
Attributable to owners of the Company
Share Foreign
based currency Proposed
Share Share compensation Statutory translation Contributed final Retained
capital premium reserve reserve reserve surplus dividend earnings Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Group
For the three months ended
30 September 2013
At 1 July 2013 97,30 2 786,115 1 33 39,768 2 04,730 1 02,151 - 534,264 1 ,764,463
Share based payment - - 2 47 - - - - 247
Total comprehensive income
for the financial period - - - - 1 1,044 - - 4,369 15,413
At 30 September 2013 9 7,302 786,115 3 80 39,768 2 15,774 1 02,151 - 538,633 1 ,780,123
For the three months ended
30 September 2012
At 1 July 2012 9 7,302 786,115 - 39,768 1 69,429 1 02,151 - 527,196 1 ,721,961
Total comprehensive income
for the financial period - - - - (3,145) - - 2,453 (692)
At 30 September 2012 9 7,302 786,115 - 39,768 1 66,284 1 02,151 - 529,649 1 ,721,269
For the nine months ended
30 September 2013
At 1 January 2013 9 7,302 786,115 - 39,768 1 70,189 1 02,151 - 515,926 1 ,711,451
Share based payment - - 3 80 - - - - - 380
Total comprehensive income
for the financial period - - - - 4 5,585 - - 22,707 68,292
At 30 September 2013 9 7,302 786,115 3 80 39,768 2 15,774 1 02,151 - 538,633 1 ,780,123
For the nine months ended
30 September 2012
At 1 January 2012 9 7,302 786,115 - 39,768 1 62,147 1 02,151 - 569,370 1 ,756,853
Dividend declared for FY2011 4,035 (4,035) -
Dividend paid for FY2011 - - - - - - (4,035) - (4,035)
Total comprehensive income
for the financial period - - - - 4 ,137 - - (35,686) (31,549)
At 30 September 2012 9 7,302 786,115 - 39,768 1 66,284 1 02,151 - 529,649 1 ,721,269
7
Attributable to owners of the Company
Share Foreign
based currency Proposed
Share Share compensation translation Contributed final Retained
capital premium reserve reserve surplus dividend earnings Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Company
For the three months ended
30 September 2013
At 1 July 2013 97,30 2 786,115 1 33 1 25,755 1 02,151 - 362,190 1 ,473,646
Share based payment - - 2 47 - - - - 247
Total comprehensive income
for the financial period - - - - - - (1,589) (1,589)
At 30 September 2013 9 7,302 786,115 3 80 1 25,755 1 02,151 - 360,601 1 ,472,304
For the three months ended
30 September 2012
At 1 July 2012 9 7,302 786,115 - 1 25,755 1 02,151 - 365,164 1 ,476,487
Total comprehensive income
for the financial period
- - - - - - 20 20
At 30 September 2012 9 7,302 786,115 - 1 25,755 1 02,151 - 365,184 1 ,476,507
For the nine months ended
30 September 2013
At 1 January 2013 9 7,302 786,115 - 1 25,755 1 02,151 - 364,572 1 ,475,895
Share based payment - - 3 80 - - - - 380
Total comprehensive income
for the financial period
- - - - - - (3,971) (3,971)
At 30 September 2013 9 7,302 786,115 3 80 1 25,755 1 02,151 - 360,601 1 ,472,304
For the nine months ended
30 September 2012
At 1 January 2012 9 7,302 786,115 - 1 25,755 1 02,151 - 375,170 1 ,486,493
Dividend declared for FY2011 - - - - - 4,035 (4,035) -
Dividend paid for FY2011 (4,035) - (4,035)
Total comprehensive income
for the financial period - - - - - - (5,951) (5,951)
At 30 September 2012 9 7,302 786,115 - 1 25,755 1 02,151 - 365,184 1 ,476,507
8
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 equity securities, issue of shares for cash or as consideration for acquisition or for
any other purpose since the end of the previous period reported on. State also the number of
shares that may be issued on conversion of all the outstanding convertibles, as well as the
number of shares held as treasury shares, if any, against the total number of issued shares
excluding treasury shares of the issuer, as at the end of the current financial period reported
on and as at the end of the corresponding period of the immediately preceding financial
year.
Par value
Number of
shares
Issued and
paid-up
share capital
HK$ HK$
Issued and fully paid-up ordinary shares
and balances as at 30 September 2012
and 30 September 2013
0.10
973,023,354
97,302,335
Note:
There were no changes in the Company’s share capital since the end of the previous period
reported on.
As at 30 September 2013, the number of new shares to be allotted and issued by the Company,
pursuant to the exercise of warrants issued to International Finance Corporation (“IFC”) was
34,008,108 ordinary shares. (2012: Nil).
(i) Employee Share Option Plan
As at 30 September 2013, the number of outstanding share options was 2,585,000 (30
September 2012: Nil).
(ii) Performance Share Plan (“PSP”)
As at 30 September 2013, the number of shares outstanding under the Company’s PSP was
1,550,000 (30 September 2012: Nil).
(iii) Restricted Share Plan (“RSP”)
As at 30 September 2013, the number of shares outstanding under the Company’s RSP was
1,034,000 (30 September 2012: Nil).
1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end
of the current financial period and as at the end of the immediately preceding year.
Par value
HK$ Number of shares
Issued and fully paid-up ordinary
shares and balance as at 1 January
and 30 September 2013
0.10
973,023,354
1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury
shares as at the end of the current financial period reported on.
Not applicable.
2. Whether the figures have been audited or reviewed, and in accordance with which
auditing standard or practice.
The figures have not been audited nor reviewed by the Company’s auditors.
9
3. Where the figures have been audited or reviewed, the auditors' report (including any
qualifications or emphasis of a matter).
Not applicable.
4. Whether the same accounting policies and methods of computation as in the issuer's
most recently audited annual financial statements have been applied.
The Group has applied the same accounting policies and methods of computation adopted in the
preparation of financial statements for the year ended 31 December 2012.
5. If there are any changes in the accounting policies and methods of computation,
including any required by an accounting standard, what has changed, as well as the
reasons for, and the effect of, the change.
Not applicable.
6. Earnings per ordinary share of the group for the current financial period reported on and
the corresponding period of the immediately preceding financial year, after deducting
any provision 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).
Three months
ended
30 September
2013
HK$ cents
Three months
ended
30 September
2012
HK$ cents
Nine months
ended
30 September
2013
HK$ cents
Nine months
ended
30 September
2012
HK$ cents
Earnings/(loss) per Share
- Basic (1)
- Diluted (2)
0.45
0.45
0.25
0.25
2.33
2.33
(3.67)
(3.67)
Explanatory notes:
1. Basic earnings per share (“EPS”) is calculated based on the profit attributable to shareholders for
the period ended 30 September 2013 and 2012 and the weighted average number of shares
973,023,354 (2012: 973,023,354).
2. Diluted EPS is calculated based on weighted average number of fully paid shares in issue after
adjusting for dilution of shares under the employee share option plan, PSP and RSP. The
unlisted warrants have not been included in the calculation of diluted earnings per share because
they are anti-dilutive.
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.
The Group
30.9.2013
The Group
31.12.2012
The Company
30.9.2013
The Company
31.12.2012
Net asset value (HK$’000) 1,780,123 1,711,451 1,472,304 1,475,895
Number of issued shares 973,023,354 973,023,354 973,023,354 973,023,354
Net asset value per share
(HK$ cents)
182.95
175.89
151.31
151.68
10
8. A review of the performance of the group, to the extent necessary for a reasonable
understanding of the group's 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 or cyclical
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.
Review of Operating Results of the Group
Revenue
Electricity generation and construction
The revenue comprised of (i) the construction income and (ii) electricity tariff, waste handling fee and
operation and maintenance service (i.e. revenue from operation services). The revenue mix is
shown in the table below:
Three months
ended 30
September
2013
Three months
ended 30
September
2012
Increase /
(decrease)
HK$'000 HK$'000 %
Revenue from operation services 109,045 89,156 22.3
Revenue from construction services 54,655 4,621 1,082.8
Total 163,700 93,777 74.6
In Q3 2012, there were five plants in operation, namely Jinjiang, Huangshi, Huian, Anxi and Fuqing.
In Q3 2013, there are six plants including Jianyang in operation. The aggregate daily waste
treatment capacity of the six operating plants is 5,100 tonnes.
Revenue from operation services comprises power generation and waste handling fees of
HK$108.6million and operation and maintenance service fees of HK$0.4million.The revenue from
operation services increased by 22.3% for the three months ended 30 September 2013. During the
quarter, the Group processed approximately 429,000 tonnes of waste and generated 104,195,000
kWh of sold on-grid electricity, an increase of 16.2% and 17.5% respectively compared with Q3 2012.
The average utilisation rate for waste handling increased from 89.2% in Q3 2012 to 91.5% in Q3
2013, and the average utilisation rate for electricity generation increased from 60.7% in Q3 2012 to
65.9% in Q3 2013. The increase in revenue from operation services for power generation and waste
handling fee was mainly attributable to additional sources of waste supply from the cities in proximity
to the plants, upward adjustment of waste handling fee of Jinjiang, Huian and Anxi plants and the
contribution from newly-operational plants. The operating plants are gradually improving their
operational efficiency in both waste processing and electricity generation.
Construction services revenue is recognised according to the percentage of completion for
construction of Waste-to-Energy (“WTE”) plants. During the period under review, the revenue from
construction services was mainly generated from Anxi phase 2. Less construction revenue was
recognised as construction work for Langfang and Jianyang were substantially completed in prior
period.
11
Gross profit
A breakdown of the gross profit by sector is as follows:
Three months
ended 30
September
2013
Three
months
ended 30
September
2012
Increase /
(decrease)
HK$'000 HK$'000 %
Gross profit
Operation services 46,926 51,064 (8.1)
Construction services - 70 (100.0)
Total 46,926 51,134 (8.2)
Gross profit margin
Operation services 43.0% 57.3%
Construction services 0.0% 1.5%
Total 28.7% 54.5%
The gross profit margin from the operations decreased from 57.3% for the three months ended 30
September 2012 to 43.0% for the three months ended 30 September 2013. This is mainly due to
Jinjiang plant having gone through overhauls in the second half of year 2013.
Other income
Other income increased mainly due to the increase in value added tax refund from the relevant
authorities of HK$6.4million and reimbursement income from a contractor for the use of facilities of
HK$7.5million for the three months ended 30 September 2013. Entitlement to the value added tax
refund was subjected to the discretion of the relevant authorities. In Q3 2013, Jinjiang, Huangshi,
Huian and Anxi projects were entitled to receive the value added tax refund, which was recognised
as other income. In Q3 2012, however the authorities requested to offset value added tax on
acquisition of equipment with value added tax on the sales of electricity, which was recognised as a
reduction of the assets cost.
Administrative expenses
Administrative expenses which include payroll expenses, legal and professional expenses, travelling
and business development-related expenses amounted to HK$23.7million for the three months
ended 30 September 2013. The balance remained relatively constant compared to Q3 2012.
Other operating expenses/(income)
I
n September 2013, Nanping project was put through process of deregistration following an internal
review. As a result, the Group has written off the construction in progress and fixed assets of
HK$3.9million as other operating expenses. In Q3 2012, other operating expenses include written off
intangible asset of the Yingkou project which amounted to HK$11.9million and the fair value change
of the warrants of HK$0.8million.
Finance costs
Finance costs increased from HK$27.3million to HK$31.3million for the three months ended 30
September 2013. This was mainly due to cessation of capitalisation of interest of the Jianyang
project with the completion of construction work.
I
ncome tax expense
I
ncome tax expense comprises deferred tax. The increase was mainly due to increase in deferred
tax expense arising from the GAAP differences for intangible assets in accordance with IFRIC 12.
12
EBITDA
EBITDA on recurring items is shown in the table below. Construction profit is excluded in the below
analysis as the amount is recognised according to the percentage of completion of the construction
work of the plants. This amount fluctuates every quarter.
Three months
ended 30
September 2013
Three months
ended 30
September 2012
Increase /
(decrease)
HK$'000 HK$'000 %
EBITDA on recurring basis (exclude
construction profit) 76,387 56,253 35.8
The EBITDA on a recurring basis for the three months ended 30 September 2013 increased by
35.8% due to the improvement of the operational efficiency and increase of the operating profit.
Net profit/(loss)
The net profit of HK$4.4million for the quarter was mainly attributable to the increase in revenue from
operation services mainly due to upward adjustment of waste handling fee of Jinjiang, Huian and
Anxi plants and additional sources of waste from the cities in proximity to the plants.
Financial Position of the Group
ASSETS
I
ntangible assets
I
ntangible assets represent the service concession rights for WTE BOT projects in PRC. The
intangible assets were stated at amortised cost with the initial measurement at the fair value, which
was assessed by an independent valuer with reference to the replacement cost and the percentage
of completion of the construction of the work for each project. The increase of HK$114.5million in
intangible assets was due to the movement below:
HK$’000
Net book value as at 1 January 2013 3,944,712
Add: Addition during the year 103,888
Less: Amortisation for the year (96,501)
Exchange gain 107,064
Net book value as at 30 September 2013 4,059,163
Trade receivables
The trade receivable balance of HK$140.2million comprised receivables from waste services of
HK$19.7million, electricity tariff of HK$120.4million and HK$0.1million for operation and
maintenance service fee. Trade receivables decreased by HK$5.4million due to settlement of
electricity receivables for the period from October 2010 to April 2011 and for the year 2012. This was
partially offset by the overall increase in operational revenue.
Gross amounts due (to)/from customers for contract work
The balance represents the amount prepaid or payable to the contractors and suppliers, calculated
based on the percentage of completion of construction work. The decrease in gross amounts due
from customers for contract work was mainly due to the utilisation of prepaid amount for the
construction cost for the Anxi phase two project and refund for construction cost of Xiaogan project.
This was partially offset by the increase in payments for construction work for the Thailand project.
The drop in gross amounts due to customers for contract work was mainly due to settlement to
contractors for the Anxi phase two project.
Other deposits and other receivables
The balance mainly represents tender deposit paid for the BOT contracts, value-added tax
receivables and prepaid expenses paid on behalf of contractors. The balance increase of
13
HK$4.3million was mainly because of the increase in other receivables for the reimbursement
income from a contractor for the Jianyang project.
Trade deposit and prepayment
The increase in trade deposit and prepayment of HK$20.2million was mainly due to the increase in
prepayment for spare parts used for operation and maintenance services in year 2013 and the
prepaid bank charge for refinancing loans.
Pledged bank deposits
The pledged bank deposits represented: (i) deposit of HK$26.2million placed in the bank to facilitate
the arrangement of performance guarantee to the Thailand government for the Bangkok WTE
project; (ii) HK$10.1million guarantee to bank to secure the repayment of bills payable to certain
subcontractors and (iii) HK$8.8million deposit pledged for obtaining short-term loan for the Jinjiang
project. The balance has no significant change from last year.
Bank and cash balances
The balance increased by HK$342.8million as at 30 September 2013. It was mainly due to the
drawndown of a refinancing loan for Jinjiang project of RMB400million (equivalent to
HK$504.2million) which was used to repay the amount due to a related company of HK$$74.4million
and construction payable. The remaining balance will be used in Q4 2013 for repayment of
outstanding bank loans of Jinjiang. For the details of the cash movement, please also refer to the
Statement of Cash Flows and the explanation notes in page 14.
LIABILITIES
Trade payables
The increase was mainly because of the increase in material cost payable for the Jinjiang, Huian and
Fuqing projects due to the increase in waste handling volume.
Interest-bearing borrowings – secured
30.9.2013 31.12.2012 Changes
HK$’000 HK$’000
Non-current portion 2,177,985 1,862,701 16.9%
Current portion 599,165 410,973 45.8%
2,777,150 2,273,674 22.1%
The interest-bearing borrowings increased by 22.1% as compared with prior year. The loan was
borrowed as project loans to finance the construction of WTE plants.
I
n 2013, HK$745.6million was drawn down and HK$310.3million was repaid. The loans were
secured by the intangible assets. As at 30 September 2013, the Group’s gearing ratio was relatively
constant.
Finance lease payable
30.9.2013 31.12.2012 Changes
HK$’000 HK$’000
Non-current portion 71 80 (11.3%)
Current portion 917 334 174.6%
988 414 138.6%
The finance lease payable represented the payable for the purchase of vehicles under hire purchase
agreements. The balance increased by 138.6% as compared with prior year was mainly due to two
vehicles acquired in year 2013.
14
Deferred income
30.9.2013 31.12.2012 Changes
HK$’000 HK$’000
Non-current portion 23,880 18,613 28.3%
Current portion 1,070 801 33.6%
24,950 19,414 28.5%
The balance represented the unrecognised part of government subsidies received by the project
companies. These balances will be recognised over the remaining concession periods of the related
projects upon commencement of operation.
The balance increase of 28.5% was mainly due to the HK$5.8million received for the slope
construction near the Fuqing plant in year 2013.
Accruals and other payables
Accruals and other payables decreased by HK$202.6million mainly due to the following reasons:
(1) Decrease in construction payables of HK$130.5million;
(2) Decrease in receipt in advance for waste handling fee for Jinjiang of HK$15.2million;
(3) Repayment of amounts due to a related company of HK$74.4million; and
(4) Net off with increase in amount due to the ultimate holding company of HK$17.9million.
F
inancial liability at fair value through profit or loss
The amount represents the fair value of the outstanding 34,008,108 unlisted warrants issued to IFC
as at 30 September 2013.The balance decrease was due to the fair value changes for the current
period.
Statement of Cash Flows
Net cash used in operating activities
The Group recorded a net cash outflow in operating activities for the period mainly because of the
increase in prepayments made for operation and maintenance services in year 2013 and increase in
loan interest expenses.
Net cash generated from investing activities
Net cash generated from investing activities in this quarter mainly represented the refund of
overpayments for the BOT projects’ construction cost.
Net cash generated from financing activities
Net cash generated from financing activities in this quarter mainly represents net cash inflow from
the drawdown of interest-bearing borrowings offset by repayment of interest-bearing borrowings and
related parties.
9. Where a forecast, or a prospect statement, has been previously disclosed to
shareholders, any variance between it and the actual results.
Not applicable.
10. A commentary at the date of the announcement of the significant trends and competitive
conditions of the industry in which the group operates and any known factors or events that
may affect the group in the next reporting period and the next 12 months.
In September 2013, Nanping project was put through the process of deregistration following an
internal review and it is expected to complete the deregistration within the next few months.
On 22 October 2013, the Group signed a letter of intent with a potential purchaser, a company listed
on a stock exchange in the PRC, to facilitate the negotiation and finalisation of a definitive sale and
15
purchase agreement (“SPA”) in respect of a proposed sale of the Group’s waste-to-energy business
and assets (including concession rights) and the principal operating subsidiaries of the Company in
the PRC. The Group will make an announcement disclosing further details of the proposed sale upon
execution of the SPA and will make appropriate update announcements on the proposed sale in the next
12 months.
In Thailand, the Group has received and signed the term sheet with a development financial institution for
its Bangkok project and is in the process of final negotiation and preparation of loan documentation for
project financing.
In the PRC, phase two of the Group’s Anxi plant commenced operation in November 2013, adding an
additional daily waste treatment capacity of 300 tonnes. In addition to bringing the Anxi plant’s total daily
waste treatment capacity to 600 tonnes, the new facilities are expected to improve the overall operational
efficiency there.
Construction for phase two of the Group’s Huian plant has already commenced and is expected to
complete by 2014, bringing the Huian plant’s total daily waste treatment capacity to 1,200 tonnes.
The new facilities are also expected to improve the overall operational efficiency for the Huian plant.
11. If a decision regarding dividend has been made:—
(a) Whether an interim (final) ordinary dividend has been declared (recommended).
None
.
(b) (i) Amount per share and (ii) previous corresponding period.
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 the dividend 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.
13. If the Group has obtained a general mandate from shareholders for IPTs, the aggregate
value of such transactions as required under Rule 920(1)(a)(ii). If no IPT mandate has been
obtained, a statement to that effect.
There is no general mandate obtained from shareholders on Interested Person Transactions.
16
14. Negative confirmation pursuant to Rule 705(5).
Confirmation by the Board
W
e, Lin Yan and Loo Cheng Guan being two Directors of C&G Environmental Protection Holdings
Limited (the “Company”), do hereby confirm on behalf of the Directors of the Company that, to the best of
our knowledge, nothing has come to the attention of the Board of Directors of the Company which may
render the 3Q FY2013 financial statements to be materially false or misleading in any material aspect.
BY ORDER OF THE BOARD
Lin Yan Loo Cheng Guan
Director Director
11 November 2013
