2013-11-21 09:46:17
Leader Environmental Technologies Limited
利德環(huán)保技術(shù)有限公司
(Incorporated in the Republic of Singapore on 15 August 2006)
(Company Registration Number: 200611799H)
Unaudited Results for the Third Quarter and the Nine Months Ended 30 September 2013
________________________________________________________________________________________________________
The initial public offering (the “IPO”) of Leader Environmental Technologies Limited was sponsored by Stirling Coleman Capital
Limited (the “Issue Manager”). The Issue Manager assumes no responsibility for the contents of this announcement.
Unaudited Financial Statement and Dividend Announcement for the Third Quarter Ended 30 September 2013 of Leader
Environmental Technologies Limited (“Company”) and Its Subsidiary (Collectively, the “Group”)
PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL
YEAR RESULTS
1(a)(i) 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 immediately preceding
year.
The Group’s operations are principally conducted in the People’s Republic of China (“PRC”). Accordingly, the
consolidated financial statements have been prepared in Chinese Renminbi (‘RMB”), being the functional currency of the Group.
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Unaudited Unaudited
Jul to Sep Jul to Sep Jan to Sep Jan to Sep
2013 2012 change 2013 2012 change
RMB'000 RMB'000 % RMB'000 RMB'000 %
Revenue 6 ,057 15,087 -59.9% 30,794 39,950 -22.9%
Cost of sales ( 4,740) ( 12,646) -62.5% ( 25,261) ( 25,858) -2.3%
Gross profit 1 ,317 2 ,441 -46.0% 5,533 14,092 -60.7%
Other items of income
Financial income 2 2 6 -92.3% 74 1,323 -94.4%
Other income 2 12 3 78 -43.9% 539 859 -37.3%
Other items of expense
Selling and distribution expenses ( 284) ( 390) -27.2% ( 1,102) ( 1,076) 2.4%
Administrative expenses ( 2,937) ( 6,359) -53.8% ( 11,448) ( 13,576) -15.7%
Finance costs ( 1,469) ( 1,631) -9.9% ( 4,610) ( 3,999) 15.3%
Other expenses 1 2 ( 148) -108.1% ( 22,506) (205) 10878.5%
Share of loss of associate companies ( 785) - NM ( 1,082) - NM
Loss before tax ( 3,932) ( 5,683) -30.8% ( 34,602) ( 2,582) 1240.1%
Income tax expense ( 184) ( 168) 9.5% ( 764) ( 2,537) -69.9%
Loss for the period attributable
to owners of the Company ( 4,116) ( 5,851) -29.7% ( 35,366) ( 5,119) 590.9%
Other comprehensive income, net of tax - - - -
Total comprehensive loss
for the period attributable to
owners of the Company ( 4,116) ( 5,851) -29.7% (35,366) ( 5,119) 590.9%
Group Group
Q3 9 months
2
1(a)(ii) The following items (with appropriate breakdowns and explanations), if significant, must either be included in the
income statement or in the notes to the income statement for the current financial period reported on and the
corresponding period of immediately preceding year.
(i) Loss before income tax is arrived at after charging/(crediting) the following:
Unaudited Unaudited Unaudited Unaudited
Jul to Sep Jul to Sep Jan to Sep Jan to Sep
2013 2012 change 2013 2012 change
RMB'000 RMB'000 % RMB'000 RMB'000 %
Depreciation of property, plant
and equipment 240 187 28.3% 723 615 17.6%
Amortisation of intangible asset 189 23 721.7% 567 96 490.6%
Allowance on impairment loss on
trade receivables - 1,942 NM - 1,942 NM
Impairment loss on trade receivables - - - 22,331 - NM
Impairment loss on gross amount due
from customers for contract work-inprogress
- 1,169 NM - 1,169 NM
Operating lease expenses 242 482 -49.8% 1,114 1,366 -18.4%
Interest expense 1,469 1,631 -9.9% 4,610 3,999 15.3%
Interest income (2) (26) -92.3% (74) (1,323) -94.4%
Inventories recognised as an expense 6,347 6,341 0.1% 12,002 17,630 -31.9%
in cost of goods sold
Employees compensation 1,968 2,256 -12.8% 5,913 5,915 -
Exchange (gain)/loss (35) (294) -88.1% 88 (759) -111.6%
Group Group
Q3 9 months
3
1(b)(i) Statement of financial position (for the issuer and group) together with a comparative statement as at the
end of the immediately preceding year.
Unaudited Unaudited Unaudited Unaudited
30 Sep 2013 31 Dec 2012 30 Sep 2013 31 Dec 2012
RMB'000 RMB'000 RMB'000 RMB'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 11,49 5 12,973 6 8
Intangible assets 6,165 6,697 - -
Club membership 821 856 - -
Investment in subsidiary - - 152,494 152,494
Investment in associates 6,254 2,491 6,334 2,557
24,735 23,017 158,834 155,059
CURRENT ASSETS
Gross amount due from customers for
contract work-in-progress 38,799 45,360 - -
Inventories 2,639 3,290 - -
Trade and other receivables 262,394 307,950 40,589 40,554
Prepayments 196,900 138,843 221 204
Bank deposits pledged - 1,334 - -
Cash and bank balances 12,537 56,348 1,523 928
513,269 553,125 42,333 41,686
TOTAL ASSETS 538,004 576,142 201,167 196,745
Equity and liabilities
CURRENT LIABILITIES
Trade and other payables 44,928 57,911 508 470
Loans and borrowings 80,000 80,000 - -
Other liabilities 26,618 28,640 1,067 1,529
151,546 166,551 1,575 1,999
NET CURRENT ASSETS 361,723 386,574 40,758 39,687
Non-current liabilities
Deferred tax liabilities 4,537 4,123 - -
TOTAL LIABILITIES 156,083 170,674 1,575 1,999
NET ASSETS 381,921 405,468 199,592 194,746
Equity attributable to owners of the
Company
Share capital 205,834 194,015 205,834 194,015
Reserves 30,776 30,776 - -
Accumulated reserves/(loss) 145,311 180,677 ( 6,242) 731
TOTAL EQUITY 381,921 405,468 199,592 194,746
TOTAL EQUITY AND LIABILITIES 538,004 576,142 201,167 196,745
Group Company
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1(b)(ii) Borrowings and debt securities (for the group) together with a comparative statement as at the end of
the immediately preceding year.
As at 30 Sep 2013 As at 31 Dec 2012
RMB'000 RMB'000
Amount repayable in one year or less, or on demand
- secured - -
- unsecured 80,000 80,000
80,000 80,000
Amount repayable after one year
- secured - -
- unsecured - -
- -
Group
Details of any collateral
As at 30 September 2013, a corporate guarantee from the Company and personal guarantees by the Executive Chairman
cum Chief Executive Officer of the Company and his spouse were provided for the short term bank loan of RMB80.0
million (31 December 2012: RMB80.0 million).
5
1(c) Statement of cash flows (for the group) together with a comparative statement for the corresponding period
of immediately preceding year.
Consolidated statements cash flows
30.9.13 30.9.12
RMB'000 RMB'000
Cash flows from operating activities
Loss before tax (34,602) (2,582)
Adjustments for :
Fair value of shares issued pursuant to LET Performance Share
Scheme 2,070 -
Depreciation of property, plant and equipment 723 615
Amortisation of intangible assets 567 96
Gain on disposal of property, plant and equipment (Note A) (271) -
Interest income (74) (1,323)
Finance costs 4,610 3,999
Share of results of associates 1,082 -
Allowance for impairment on trade receivables - 1 ,942
Impairment loss on trade receivables 22,331 -
Impairment loss on gross amount due from customers for
contract work-in-progress - 1 ,168
Unrealised exchange loss/(gain) 149 (483)
Total adjustments 31,187 6,014
Operating (loss)/profit before working capital changes (3,415) 3,432
Changes in working capital
Decrease in gross amount due from customers for
contract work-in-progress 6,561 101,069
Decrease in inventories 651 176
Decrease/(increase) in trade and other receivables 23,225 (60,800)
Increase in prepayments (58,057) (102,496)
Decrease in trade and other payables (11,957) (18,073)
Decrease in other liabilities (2,022) (33,719)
Cash flows used in operating activities (45,014) (110,411)
Interest income received 74 1,323
Interest expenses paid (4,610) (3,999)
Income taxes paid (350) (5,211)
Net cash used in operating activities (49,900) (118,298)
Cash flows from investing activities
Purchase of property, plant and equipment - (8,822)
Investment in associate (4,874) -
Net cash used in investing activities (4,874) (8,822)
Cash flows from financing activities
Proceeds from issuance of new shares
pursuant to placement exercise 9,749 -
Proceeds from loans and borrowings - 30,000
Dividends paid on ordinary shares - (7,500)
Decrease/(increase) in bank deposits pledged 1,334 (805)
Net cash generated from financing activities 11,083 21,695
Net decrease in cash and cash equivalents (43,691) (105,425)
Effect of exchange rate changes on cash and cash equivalents (120) 483
Cash and cash equivalents at 1 January 56,348 138,612
Cash and cash equivalents at 30 Sep (Note B) 12,537 33,670
Group
Unaudited 9 months ended
6
1(c) Statement of cash flows (for the group) together with a comparative statement for the corresponding period
of immediately preceding year.
Consolidated statement of cash flows (cont’d)
Note A: The net proceeds on disposal of property, plant and equipment amounting to S$1,026,000 have been offset
against the balance owing to trade creditors as they relate to agreements with certain suppliers to use the
subsidiary’s motor vehicles as part of settlements for raw materials purchased.
RMB'000 RMB'000
Note B: Cash and cash equivalents 2013 2012
Cash and bank balances 12,53 7 35,004
Short-term deposits - -
12,537 35,004
Less: bank deposits pledged - (1,334)
Cash and cash equivalents 12,537 33,670
Group
As at 30 Sep
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1(d)(i) Changes in equity (for the issuer and group) together with a comparative statement for the corresponding period of immediately preceding year.
Statements of Changes in Equity
Group - Statement of changes in equity for 9 months
ended 30 September 2013
Share
capital
PRC statutory
common reserve
Merger
reserve
Accumulated
profits
Performance
share reserve
Total
equity
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Balance at 1 January 2013 194,01 5 31,230 (454) 180,677 - 405,468
Total comprehensive loss for the period - - - (35,366) - (35,366)
Grant of shares under LET Performance share scheme - - - - 2,070 2,070
Reclassification 2,070 - - - (2,070) -
Issuance of new shares 9,749 - - - - 9,749
Balance at 30 September 2013 205,834 31,230 (454) 145,311 - 381,921
Group - Statement of changes in equity for 9 months
ended 30 September 2012
Share
capital
PRC statutory
common reserve
Merger
reserve
Accumulated
profits Total equity
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Balance at 1 January 2012 1 94,015 31,230 (454) 231,198 455,989
Total comprehensive loss for the period - - - (5,119) (5,119)
Dividends paid - - - (7,500) (7,500)
Balance at 30 September 2012 194,015 31,230 (454) 218,579 443,370
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1(d)(i) Changes in equity (for the issuer and group) together with a comparative statement for the corresponding
period of immediately preceding year (cont’d)
Statements of Changes in Equity (cont'd)
Company - Statement of changes in equity for 9
months ended 30 September 2013
Share
capital
Accumulated
loss
Performance
share reserve Total
RMB'000 RMB'000 RMB'000 RMB'000
Balance at 1 January 2013 194,01 5 731 - 1 94,746
Total comprehensive loss for the period - ( 6,973) - ( 6,973)
Grant of shares under LET Performance share scheme - - 2 ,070 2 ,070
Reclassification 2,070 - ( 2,070) -
Issuance of new shares 9,749 - - 9 ,749
Balance at 30 September 2013 2 05,834 (6,242) - 1 99,592
Company - Statement of changes in equity for 9
months ended 30 September 2012
Share
capital
Accumulated
profits Total
RMB'000 RMB'000 RMB'000
Balance at 1 January 2012 1 94,015 7,500 2 01,515
Total comprehensive profit for the period - 2 ,552 2 ,552
Dividends paid - ( 7,500) (7,500)
Balance at 30 September 2012 1 94,015 2,552 1 96,567
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1(e) Changes in issuer’s share capital (for the issuer) 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
Number of shares Share capital
RMB'000
As at 1 January 2013 491,612,00 0 194,015
Grant of shares under LET Performance Share Scheme 4 ,600,000 2,070
4 96,212,000 196,085
Issuance of new shares 3 1,747,000 9,749
Issued and fully paid-up as at 30 September 2013 5 27,959,000 205,834
Company
On 26 April 2013, the Company allotted an issued, an aggregate 4,600,000 new shares to 6 employees of the subsidiary
in accordance with the terms of the LET Performance Share Scheme approved by shareholders at the Extraordinary
general meeting of the Company convened on 30 April 2012 (including a moratorium of 6 months in respect of any sale,
disposal, transfer or other encumbrance of such new shares by the employees and an undertaking by the employees to
remain in the employment of the Company for a period of 2 years). The new shares constituted approximately 0.94% of
the issued shares of the Company as at 1 January 2013 and the last traded market price of the shares prior to the issue
and allotment date was S$0.067.
On 21 June 2013, the Company undertook a private placement which comprised the placement of 31,747,000 new
ordinary shares in the capital of the Company at $0.063 for each new share.
The Company obtained the in-principle approval from the SGX-ST for the listing and quotation for 31,747,000 new shares
on 15 July 2013 and these new shares were successfully listed and quoted on the Main Board of the SGX-ST on 17 July
2013.
Consequent to the private placement, the issued share capital of the Company increased from 496,212,000 shares to
527,959,000 shares.
1(f) Number of shares that may be issued on conversion of all outstanding convertibles together with a
statement for the corresponding period of immediately preceding year
Not applicable. The Company does not have any convertibles as at 30 September 2013 and 31 December 2012.
1(g)(i) Number of shares held as treasury shares, if any, against the total number of issued shares excluding
treasury shares of the issuer together with a statement for the corresponding period of immediately
preceding year
30 Sep 2013 31 Dec 2012
Total number of shares issued at end of period/year 527,959,000 491,612,000
The Company does not have any treasury shares as at 30 September 2013 and 31 December 2012.
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1(g)(ii) 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. The Company does not have any treasury shares as at 30 September 2013 and 31 December 2012.
2. Whether the figures have been audited or reviewed, and if so which auditing standard or practice has
been followed.
The financial statements presented above have not been audited or reviewed by the Company's auditors.
3. Where the figures have been audited or reviewed, please provide a statement on whether there are
any qualifications or emphasis of 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.
Except for the adoption of the amendments to FRS applicable for the financial year beginning or after 1 January 2013, the
Group has adopted the same accounting policies in the financial statements for the current period as those in its audited
consolidated financial statements as at 31 December 2012.
5. If there have been any changes to the above, please make adequate disclosure and state the reasons
for and effect of the change.
Nil.
6. Earnings per ordinary share of the Group for the current financial period reported on and the corresponding
period of the immediately preceding year, after deducting any provision for preference dividends.
The calculation of the basic loss per share is based on the Group’s net loss attributable to owners of the Company for the
respective periods divided by the weighted average of 503,014,458 ordinary shares for the nine month ended 30
September 2013 (9M2012: 491,612,000 ordinary shares).
Jan to Sep Jan to Sep
2013 2012
Loss after tax attributable to
owners of the Company (RMB'000) (35,366) (5,119)
Basic loss per share (7.03) (1.04)
(RMB cents per share)
Group
9 months
*There were no potential dilutive options for the periods.
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7. Net asset value (for the issuer and Group) per ordinary share based on issued share capital of the issuer at the
end of the:-
(a) current financial period reported on; and
(b) immediately preceding financial year.
30 Sep 2013 31 Dec 2012 30 Sep 2013 31 Dec 2012
Net asset value (RMB'000) 381,921 405,468 199,592 194,746
Net asset value per share (RMB cents
per share) 72.34 82.48 37.80 39.61
Group Company
Net asset value for the Group and Company as at 30 September 2013 and 31 December 2012 were computed based on
527,959,000 and 491,612,000 ordinary shares in issue at the end of the financial period/year respectively.
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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 and liabilities of the Group
during the current financial period reported on.
Review of Group Performance
Consolidated Statement of Comprehensive Income
Revenue
3Q2013 3Q2012 9M2013 9M2012
RMB'000 % RMB'000 % RMB'000 % RMB'000 %
Industrial wastegas treatment
- Dust elimination 589 9.7 1,470 9.7 5,543 18.0 7,433 18.6
- Desulphurisation - - 356 2.4 - - 7,785 19.5
Industrial wastewater 2,945 48.6 7,164 47.5 13,685 44.4 18,635 46.6
Operation and maintenance 2,523 41.7 6,097 40.4 11,566 37.6 6,097 15.3
6,057 100.0 15,087 100.0 30,794 100.0 39,950 100.0
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8. A review of the performance of the Group, to the extent necessary for a reasonable understanding of the Group’s
business. (cont’d)
Revenue
9M2013 vs 9M2012
Total revenue declined by RMB9.2 million or 22.9%, from RMB40.0 million in 9M2012 to RMB30.8 million in 9M2013 due
to the absence of revenue of RMB7.8 million from desulphurization contracts and lower revenue derived from dust
elimination and industrial wastewater contracts of RMB6.8 million in aggregate as we continue to be selective and only
undertake those projects which offer better payment terms and/or gross profit margin in 9M2013. The decrease was partly
offset by higher revenue from operation and maintenance (“O&M”) of RMB5.4 million as the one year contract
commenced from 3Q2012.
Gross profit and gross profit margin
Total gross profit decreased by RMB8.6 million or 60.7% to RMB5.5 million in 9M2013. The decrease was attributed to
the absence of gross profit contribution from desulphurization contracts of RMB6.5 million and lower gross profit
generated from dust elimination and industrial wastewater contracts of RMB3.1 million in aggregate. The decrease of
RMB9.6 million was partly offset by higher gross profit derived from O&M segment of RMB1.0 million in 9M2013 as the
service commenced from 3Q2012.
Overall gross profit margin declined by 17.3%, from 35.3% in 9M2012 to 18.0% in 9M2013 as we had not embarked on
any design or engineering, procurement and construction works relating to desulphurization contracts in 9M2013 as they
usually offer higher gross profit margin. In addition, the gross profit margin was further dragged down by dust elimination
contracts of 22.3% in 9M2013 against 35.0% in 9M2012 as there was one contract which was at the design phase and
accounted for the higher gross profit margin in 9M2012.
Other items of income
Financial income decreased by RMB1.2 million or 94.4% in 9M2013 as the short term deposits were fully drawn down for
operating expenses.
Other income for 9M2013 decreased by approximately RMB0.3 million or 37.3%, from RMB0.8 million in 9M2012 to
RMB0.5 million in 9M2013 due mainly to the absence of exchange gain of RMB0.7 million and miscellaneous income of
RMB0.1 million in 9M2013, partly offset by one-off gain on disposal of property, plant and equipment of RMB0.3 million
and fines collected from certain outsourcing parties of RMB0.2 million for breach of contract.
Other items of expense
For 9M2013, the fluctuation in selling and distribution expenses was not material.
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8. A review of the performance of the Group, to the extent necessary for a reasonable understanding of the Group’s
business. (cont’d)
Administrative expenses decreased by RMB2.1 million, from RMB13.5 million in 9M2012 to RMB11.4 million in 9M2013
due mainly to the absence of consultancy fee of RMB0.9 million as the service contract expired on 31 December 2012,
lower travelling, entertainment and others of RMB0.7 million in aggregate due to cost controls implemented by the Group.
In addition, we recorded RMB3.1 million of allowances on impairment loss on trade receivables and amount due from
customers for contract work-in-progress in 3Q2012, which was subsequently reclassified to other expenses in 4Q2012.
The decrease of RMB4.7 million was partly offset by a non-cash charge of RMB2.1 million, being the fair value of the 4.6
million shares issued to six employees pursuant to the Company’s Performance Share Scheme and higher amortization of
deferred development cost of RMB0.5 million in 9M2013 as amortization commenced from 1 December 2012 onwards.
Higher interest expenses were incurred of RMB4.6 million in 9M2013 against RMB4.0 million in the same corresponding
period as the loan quantum was maintained at RMB80.0 million throughout in 9M2013, whereas in 9M2012, the average
loan drawn down was RMB67.5 million.
Other expenses increased by RMB22.3 million in 9M2013, attributed mainly to the impairment loss on trade receivables
recognized on two customers in the previous quarter of 2013.
Income tax expense
With effect from 1 January 2008, in line with the China Corporate Tax Law, companies which do not enjoy full tax
exemptions will be subject to the corporate income tax of 25%. However, the State Administration of Taxation has allowed
a transitional period to be progressively applied for foreign enterprises which operate in any of the Economic Development
Zone of the PRC. Accordingly, the new corporate income tax rate applicable to Jilin Anjie Environmental Engineering Co.,
Ltd was 10% in 2009, 11% in 2010, 12% in 2011 and 25% in 2012, after taking into account the 50% reduction in income
tax from FY2009-FY2011. In addition, the Group has provided for withholding tax of 10% on the portion of the distributable
profits derived by the PRC subsidiary which is expected to be distributed out as dividend.
Income tax expense decreased by RMB1.8 million or 69.9%, from RMB2.5 million in 9M2012 to RMB0.7 million in
9M2013. In line with the Group’s loss making position in 9M2013, withholding tax was solely provided on the potential
amount of dividends expected to be declared to finance the working capital of the holding company which resulted in
lower withholding tax provided of RMB0.1 million. In addition, no corporate tax was provided in 9M2013 other than the
corporate tax of RMB0.3 million which relates to final tax assessment for FY2012 when compared against RMB2.0 million
of income tax expense in 9M2012.
In the light of the foregoing, loss after taxation increased from RMB5.1 million in 9M2012 to RMB35.4 million in 9M2013.
15
8. A review of the performance of the Group, to the extent necessary for a reasonable understanding of the Group’s
business. (cont’d)
Financial position
1. Non-current assets
Non-current assets amounted to RMB24.7 million and comprise property, plant and equipment (“PPE”) of RMB11.4
million, intangible assets of RMB6.2 million, club membership of RMB0.8 million and investment in associates of
RMB6.3 million as at 30 September 2013. The decrease in PPE of RMB1.5 million was attributed to disposal of PPE
of RMB0.8 million and depreciation of RMB0.7 million in 9M2013.
1.1 Intangible assets amounted to RMB6.2 million and comprise patent of RMB0.1 million and deferred development
costs of RMB6.1 million as at 30 September 2013. The decrease in intangible assets of RMB0.5 million was
attributed mainly to amortization in 9M2013. The patent and deferred development costs have a remaining tenure of
20 months and 110 months respectively as at 30 September 2013.
1.2 Club membership which has a remaining useful life of 212 months amounted to RMB0.8 million as at 30 September
2013.
1.3 Investment in associates increased by RMB3.8 million, from RMB2.5 million as at 31 December 2012 to RMB6.3
million as at 30 September 2013 due to investment in a new associate, Nano Sun Pte Ltd of RMB4.9 million. This
new associate is involved in the developing and marketing different types of technology of producing and fabricating
TiO2 membrane and microsphere for purposes of, inter alia, treatment of waste water and purification of water. The
increase was partly offset by impairment loss of RMB1.1 million on Pioneer Membrane Pte Ltd, a local company
primary engaged in the development of oil water separation membrane. The impairment loss was recorded following
an assessment by management of the progress made to-date.
.
2. Current assets
Current assets comprise gross amount due from customers for contract work-in-progress, inventories, trade and
other receivables, prepayments, bank deposits pledged and cash and cash equivalents. Current assets amounted to
RMB513.3 million and RMB RMB553.1 million as at end of 30 September 2013 and 31 December 2012 respectively.
Our current assets accounted for 95.4% and 96.0% of our total assets as at 30 September 2013 and 31 December
2012 respectively.
2.1 Amount due from customers for contract work-in-progress amounted to RMB38.8 million and RMB45.4 million as at
30 September 2013 and 31 December 2012 respectively and accounted for 7.6% and 8.2% of our current assets as
at 30 September 2013 and 31 December 2012 respectively. The decrease of RMB6.6 million was in line with the
decrease in business activities.
2.2 Inventories decreased by approximately RMB0.7 million, from RMB3.3 million as at 31 December 2012 to RMB2.6
million as at 30 September 2013, which was in line with the decrease in business activities.
2.3 Trade and other receivables comprise trade receivables, bills receivable, retention receivables and other receivables
amounted to RMB262.4 million and RMB308.0 million as at 30 September 2013 and 31 December 2012 respectively,
and accounted for approximately 51.1% and 55.7% of our current assets as at the respective balance sheet dates.
Trade receivables and retention receivables amounted to RMB255.4 million as at 30 September 2013, representing a
decrease of approximately RMB24.6 million from 31 December 2012. The decrease was attributed to impairment loss
on trade receivables and in line with the overall decline in business activities.
2.4 Bills receivable amounted to RMB2.9 million and RMB13.1 million as at 30 September 2013 and 31 December 2012
respectively. The decrease of RMB10.2 million was mainly due to more bills receivable had been presented to the
banks for payments.
2.5 Other receivables comprise VAT receivables and advances to employees for business purposes. Other receivables
amounted to RMB4.1 million and RMB14.9 million as at 30 September 2013 and 31 December 2012 respectively.
The decrease was in line with the decrease in business activities.
2.6 Prepayments comprising prepaid operating expenses, advances to trade and non-trade suppliers amounted to
RMB197.0 million and RMB138.8 million as at 30 September 2013 and 31 December 2012 respectively. The
increase of RMB58.2 million was attributed to more advance payments made to certain suppliers of raw materials as
part of the tender requirements by the customers. The advances will be refunded back if the tenders for certain
contracts are not successful.
16
8. A review of the performance of the Group, to the extent necessary for a reasonable understanding of the Group’s
business. (cont’d)
2.7 Bank deposits pledged decreased by RMB1.4 million, from RMB1.4 million as at 31 December 2012 to nil as at 30
September 2013 as no performance guarantees were provided for certain construction contracts in 9M2013.
2.8 Cash and cash equivalents amounted to RMB12.5 million and RMB56.3 million as at 30 September 2013 and 31
December 2012 respectively, and accounted for 2.4% and 10.2% of our current assets as at the respective balance
sheet dates.
3. Current liabilities
Our current liabilities comprise mainly trade and other payables, loans and borrowings and other liabilities. Our
current liabilities amounted to RMB151.5 million and RMB166.5 million as at 30 September 2013 and 31 December
2012 respectively, and accounted for approximately 97.1% and 97.6% of total liabilities as at the respective balance
sheet dates.
3.1 Trade and other payables comprise mainly trade payables, retention monies and other payables. Trade payables
amounted to RMB42.4 million as at 30 September 2013, representing a decrease of approximately RMB13.2 million
when compared against 31 December 2012 due to settlements with suppliers and also in line with the decrease in
business activities.
3.2 Other payables comprise primarily VAT and other operating tax payables and accruals of other operating expenses
for which invoices have already been received. Other payables amounted to RMB2.5 million and RMB2.2 million as
at 30 September 2013 and 31 December 2012 respectively and the higher other payables of RMB0.3 million were
attributed to higher business tax on the operation and maintenance contract as we managed to renew the service for
another year.
3.3 Other liabilities comprise accrued output VAT, purchases, salaries and related costs, operating expenses, welfare
expenses and advances from customers. Other liabilities amounted to RMB26.6 million and RMB28.6 million as at 30
September 2013 and 31 December 2012 respectively.
3.4 Accrued output VAT, purchases, salaries and related expenses, operating expenses and welfare expenses amounted
to RMB26.1 million and RMB28.6 million as at 30 September 2013 and 31 December 2012 respectively. The
decrease was due to payments of liabilities and also in line with the overall decrease in business activities.
3.5 Advances from customers amounted to RMB0.5 million, representing an increase of approximately RMB0.5 million
over at end of FY2012. The increase was attributed to signing of new contracts during the period.
4. Non-current liability
As at 30 September 2013, our deferred tax liability amounted to RMB4.5 million, relating to withholding tax on
undistributed profits of our PRC subsidiary pursuant to the PRC tax law. An additional deferred tax of RMB0.4 million
was provided in 9M2013 on the potential amount of dividends expected to be declared to finance the working capital
of the holding company.
5. Shareholder’s equity
The Group’s total shareholder’s equity comprises share capital, PRC statutory reserve fund, merger reserve and
accumulated profits. Between 30 September 2013 and 31 December 2012, our shareholder’s equity decreased from
RMB405.5 million to RMB381.9 million due mainly to loss suffered of RMB35.4 million in 9M2013, partly offset by a
non-cash charge of RMB2.1 million, being the fair value of the 4.6 million shares issued to six employees pursuant to
the Company’s Performance Share Scheme and issuance of new shares due to private placement of RMB9.7 million.
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8. A review of the performance of the Group, to the extent necessary for a reasonable understanding of the Group’s
business. (cont’d)
CASHFLOWS
In 9M2013, operating loss before working capital changes amounted to RMB3.4 million. Net cash flows used in operating
activities amounted to RMB46.5 million attributed mainly to:
(i) an increase in prepayments of RMB58.1 million;
(ii) a decrease in trade and other payables of RMB12.0 million;
(iii) a decrease in other liabilities of RMB2.0 million;
(iv) payment of interest expense of approximately RMB4.6 million incurred on the loans from China Merchant Bank;
and
(v) payment of income taxes of approximately RMB0.3 million.
The decrease was partly offset by:
(i) a decrease in inventories of RMB0.7 million;
(ii) a decrease in gross amount due from customers for work-in-progress of RMB6.6 million; and
(iii) a decrease in trade and other receivables of RMB23.2 million.
Net cash outflows from investing activities of approximately RMB4.9 million as a result of investment in an associate
company.
Net cash inflows from financing activities of approximately RMB11.1 million were attributed to proceeds received of
RMB9.7 million from the issuance of new shares pursuant to a placement exercise on 21 June 2013 and decrease in bank
deposits pledged of RMB1.4 million as no performance guarantee was required for certain construction contract.
Overall our cash and cash equivalents decreased by approximately RMB43.7 million in 9M2013, further dragged down by
the effect of exchange rate changes on cash and cash equivalents of RMB0.1 million to RMB43.8 million. In the light of
the foregoing, overall cash and cash equivalents decreased from RMB56.3 million as at 31 December 2012 to RMB12.5
million as at 30 September 2013.
9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between
it and the actual results.
Not applicable.
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10. A commentary of the competitive conditions of the industry in which the group operates and any known factors
that might affect the group in the next reporting period and the next 12 months has been provided.
The lacklustre performance of the Group is expected to continue into the last quarter of FY2013. So far, we have yet to
secure any major industrial wastewater and wastegas contracts for FY2014 as we are still waiting for the tender results.
As for the recovery of long overdue trade receivables, we continue to focus our attention on collections of outstanding
trade receivables. More follow ups would have to be made with the customers.
The strong emphasis by the PRC government recently in tackling environmental pollution has given the Group renewed
confidence in our business. The announcement by China to invest RMB1.7 trillion in a multi-year effort to combat air
pollution has also provided us with the motivation and incentive to undertake more projects, which we hope to capitalize.
Accordingly, we are actively sourcing for credible projects which offer better payment terms and/or higher gross margin so
as to improve the bottom line of the Group in the next twelve months.
11. Dividend
(a) Current Financial Period Reported On
Any dividend recommended for the current financial period reported on?
No.
(b) Corresponding Period of the Immediately Preceding Financial Year
Any dividend declared for the corresponding period of the immediately preceding financial year?
No.
(c) Date Payable
Not applicable.
(d) Book Closure Date.
Not applicable.
12. If no dividend has been declared/recommended, a statement to that effect.
No dividend for the nine months ended 30 September 2013 is declared or recommended.
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.
The Group has not obtained a general mandate from its shareholders for IPTs.
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14. Update of usage of IPO and placement proceeds
As at 30 September 2013, the net proceeds from the Company’s initial public offering have been utilised as follows:
Usage of IPO proceeds Change in
Amount allocated Amount utilised use of proceeds Balance
RMB'000 RMB'000 RMB'000 RMB'000
Increase and enhance research and
development activities 15,107 (14,182 ) (925) -
Investment in capital expenditures 3,021 ( 120) ( 2,901) -
To increase in sales and marketing activities
in the representative offices 3,021 ( 1,895) ( 1,126) -
To secure and undertake large scale 50,358 (50,358) - -
environmental projects
General working capital 6,654 ( 6,654) 4,952 4,952
Total 78,161 (73,209) - 4,952
For full details regarding the change in use of the IPO proceeds of RMB4,952,000, from “increasing and enhancing
research and development activities, investment in capital expenditures and increase in sales and marketing activities in
the representative offices to general working capital for the Company”, please refer to the Company’s announcement
dated 14 June 2013.
Private placement on 20 April 2011
Usage of private placement proceeds Original
amount allocated Revised amount Amount utilised Balance
RMB'000 RMB'000 RMB'000 RMB'000
To undertake large scale projects 63,074 55,052 (54,098) 954
General working capital for the Company - 8,022 (8,022) -
Total 63,074 63,074 (62,120) 954
For full details regarding the change in use of the placement proceeds from “undertaking large scale projects to general
working capital for the Company”, please refer to the Company’s announcement dated 3 May 2012.
The funds allocated for general working capital of RMB6.7 million was mainly for IPO expenses, whereas, the amount of
RMB8.0 million was for payments of payroll and related costs, Directors’ fees, professional fees, compliance costs and
other operating expenses of the Company.
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Private placement on 21 June 2013
Usage of private placement proceeds Amount allocated Amount utilised Balance
RMB'000 RMB'000 RMB'000
Investment opportunity through acquisition, joint venture and
strategic alliances so as to create synergistic values to the
existing busisness 4,87 4 (4,874) -
General working capital for the Company 4,875 (3,352) 1,523
Total 9,749 (8,226) 1,523
The proceeds of RMB4.9 million were invested in 20% shareholding of Nano Sun Pte Ltd, a start-up company
incorporated in Singapore and is primarily engaged in the business of developing and marketing different types of
technology of producing and fabricating TiO2 membrane and microsphere for purposes of, inter alia, treatment of
waste water and purification of water.
The funds for general working capital of RMB3.4 million was for payments of payroll and related costs, Directors’ fees,
professional fees, compliance costs and other operating expenses of the Company.
BY ORDER OF THE BOARD
Leader Environmental Technologies Limited
Lin Baiyin
Executive Chairman and Chief Executive Officer
13 November 2013
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Confirmation by the Board pursuant to Rule 705(5) of the Listing Manual
On behalf of the Board of Directors of the Company, we confirm that, to the best of their knowledge, nothing has come to
the attention of the Board of Directors which may render the third quarter and the nine months’ financial results for the
period ended 30 September 2013 to be false or misleading in any material aspect.
BY ORDER OF THE BOARD
Leader Environmental Technologies Limited
Lin Baiyin Zang Linying
Executive Chairman and Chief Executive Officer Executive Director and Finance Director
13 November 2013
