TIDMTNCI
RNS Number : 7006F
Tinci Holdings Ltd
20 June 2012
20 June 2012
TINCI HOLDINGS LTD
PRELIMINARY RESULTS FOR THE 12 MONTHS
ENDED 31 DECEMBER 2011
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 2011 in accordance with International Financial
Reporting Standards (IFRS).
Financial Highlights:
-- Total revenue of RMB 78.1 million (2010 - RMB110.2
million)
-- Profit before tax of RMB2.52 million (2010 - Loss of RMB 0.97
million)
-- Profit after tax of RMB0.78 million (2010 - Loss of RMB1.56
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 and the speciality chemical 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 two projects in the very
competitive market in 2011 with a contract value of RMB15.89
million, compared to four projects and a total contract value of
RMB133.7 million in 2010. Of the two projects won in 2011, one
employs conventional FGD technology and the other employs Spray Dry
Absorption technology from Niro of Denmark.
The Company reported in 2010 that because of the extreme
competition in the FGD market in China, the Company's management
had decided that the Company should gradually transform itself from
an engineering company to a product-oriented company by
concentrating on developing processes involving the production of
chemical products 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 2012.
The Company's order book at the end of 2011 amounted to RMB45.9
million (2010: RMB104.9 million) but the pipeline of potential
orders ended the year well ahead. During 2012 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 and
businesses, particularly in the speciality chemicals sector.
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 exploit new
polymerization technology using a newly-invented catalytic process
to convert carbon dioxide into a biodegradable plastic polymer
through the Company's associate, Guangzhou Tiancheng Biodegradation
Materials Company Limited ("Tiancheng").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 Tiancheng to the required level. Tinci's
shareholding remains at 49%. During 2010 the Provincial Government
granted the land for the joint venture to use. However, the
associate's technological progress has been slower than the
shareholders planned and the technology risk remains high. A
decision will be taken at the end of 2012 about the future of this
technology and no further investment will be made until this
decision has been made.
2. Co-Operation with China oil on Catalytic Refining Project
We have won one technology contract for catalytic refining
projects valued RMB 0.8 million from Lanzhou China Oil and the
project was developed in the second half of 2011 with the customer,
one of China's major petrochemical companies. The progress so far
under the co-operation agreement with China Oil is
satisfactory.
3. Cooperation with NanFang Alkali
A co-operation with NanFang Alkali to develop a new project
utilizing waste alkali residue as the neutralizing agent for FGD
projects was announced in 2009.
The results from this project with NanFang Alkali were
satisfactory in 2011and the joint venture became profitable and is
expected to gain more projects in 2012.
4. Investment in Jiangsu AnDy
During the year, the Company invested RMB 13.64 million in a
22.5% stake in JiangSu AnDyChemical & Pharmaceutical Co. Ltd.
("JiangSu AnDy"), a private company in Jiangsu Province Chinaset up
by Mr Kang Hongjie, its CEO and major shareholder. The funds will
be used to finance the development of JiangSu AnDy.
The management of JiangSu AnDy, led by Mr Kang, is well known to
the Tinci Board and has been successful in developing other
chemicals businesses. Tinci's Board and senior management are
primarily chemical engineers and this is a sector that they are
familiar with. I represent the Company on the Board of JiangSu AnDy
for which I do not receive any remuneration from JiangSu AnDy.
JiangSu AnDy is involved in research & development and
production and sale of chemical intermediates for the
pharmaceutical industry in China.
JiangSu AnDy's audited results for the 12 months ended 31
December 2011 showed profits before and after tax of RMB 3.2
million on turnover of RMB 40.8 million. The company had net assets
of RMB35.3 million at that date.
Financial Performance
The total business income in 2011 was RMB 78.1 million which is
29% lower than in 2010. The profit after tax was RMB 0.78 million
(compared to a loss of RMB 1.56 million in 2010).
Revenue decreased during 2011 as the company was not able to win
sufficient new orders because of stiff competition in the FGD
market. Although the decline in revenue was not satisfactory, the
economic result in 2011 was a small profit due to firm control of
operationalcosts.
Receivables decreased from RMB 199.1 million in 2010 to RMB
152.3 million in 2011 and payables decreased from RMB 160 million
in 2010 to RMB 94 million in 2011. The main reason for the decrease
in receivables was fast collection of receivables from four
projects, Chongqing jiulong, Tianjin tianqiong, Liwen, Dongguan and
Luoyang Sinopec, which were completed successfully and produced
excellent operating performance.
The cash position decreased from RMB 21.1 million in 2010 to RMB
7.23 million in 2011 mainly due to the investment in JiangSu
AnDy.
Outlook
The Company expects FGD sales to be steady in 2012 as it adjusts
its business direction focusing its FGD business in China on the
petrochemical sector. It has two large tenders outstanding at the
date of this report. If both were won, which is thought to be
unlikely, results will be ahead of 2011. Otherwise, results are
currently expected to be similar to 2011 but with a weaker first
half followed by a stronger second half.
Meanwhile, the Company will concentrate more resources in
developing new business opportunities, its DeNOx projects and its
catalytic refinery project with China Oil in the hope of achieving
a breakthrough in one of these new businesses while maintaining a
stable income from FGD in 2012.
The Company expects the investment in Jiangsu AnDy will produce
a profit in 2012.
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
20 June 2012
Tinci Holdings Limited
Consolidated Income Statement
Year ended 31 December 2011
Note 2011 2010
RMB'000 RMB'000
Turnover 2 76,840 109,570
Other income 2 1,264 604
--------- ---------
78,104 110,174
Raw material and consumables used (52,265) (90,791)
Staff costs and staff benefits expenses (8,618) (8,456)
Depreciation and amortisation expense (2,028) (2,572)
Other operating expenses (12,597) (8,819)
--------- ---------
Profit/(loss) from operations 2,596 (464)
Exchange loss (93) (14)
Finance costs (149) (305)
Share of profit of an associate 398 -
Share of losses of a jointly controlled
entity (234) (182)
--------- ---------
Profit/(loss) before taxation 3 2,518 (965)
Taxation 4 (1,740) (598)
--------- ---------
Profit/(loss) for the year 778 (1,563)
--------- ---------
Attributable to:
Shareholders of the Company 778 (1,563)
--------- ---------
RMB Cents RMB Cents
Earnings/(loss) per share (basic and
diluted) 7 1 (3)
--------- ---------
Tinci Holdings Limited
Consolidated Statement of Comprehensive Income
Year ended 31 December 2011
2011 2010
RMB'000 RMB'000
Profit/(loss) for the year 778 (1,563)
Other comprehensive income/(loss)
- Currency translation adjustments 74 (33)
------- -------
Total comprehensive income/(loss) for the year 852 (1,596)
------- -------
Total comprehensive income/(loss) attributable
to:
Shareholders of the Company 852 (1,596)
------- -------
Tinci Holdings Limited
Consolidated Statement of Financial Position
Year Ended 31 December 2011
2011 2010
Note RMB'000 RMB'000
Assets
Non-current assets
Land use rights 381 393
Property, plant and equipment 11,288 12,166
Intangible assets 1,866 6,125
Interest in associates 39,098 24,990
Interest in a jointly controlled
entity 879 453
Deferred tax assets 4,464 6,012
-------- --------
Total non-current assets 57,976 50,139
-------- --------
Current assets
Amount due from customers for
contract work 19,342 24,170
Trade and other receivables,
deposits
and prepayment 152,341 199,073
Derivative financial instruments 45 37
Restricted bank balances 2,307 6,454
Cash and bank balances 7,229 21,134
-------- --------
Total current assets 181,264 250,868
-------- --------
Total assets 239,240 301,007
-------- --------
Liabilities
Current liabilities
Amount due to customers for contract
work 57 -
Trade and other payables 93,549 157,636
Bills payable 1,883 -
Current income tax liabilities 181 653
-------- --------
Total current liabilities 95,670 158,289
-------- --------
Net assets 143,570 142,718
======== ========
Equity
Share capital 6 7,796 7,796
Share premium 18,078 18,078
Other reserves 43,211 43,193
Retained earnings 74,485 73,651
-------- --------
Total shareholders' equity 143,570 142,718
======== ========
Tinci Holdings Limited
Consolidated Statement of Changes in Equity
Year ended 31 December 2011
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
Balance at 1 January
2010 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
------- ------- ------- ----------- -------- ----------- -------
Forfeiture of share
options
- previously granted
to employees - - (56 ) - 56 - -
Total comprehensive
income for the
year - - - - 778 74 908
Balance at 31 December
2011 7,796 18,078 819 42,644 74,485 (252) 143,570
======= ======= ======= =========== ======== =========== =======
Tinci Holdings Limited
Consolidated Statement of Cash Flows
Year ended 31 December 2011
2011 2010
RMB'000 RMB'000
----------------------------------------------- ------- -------
Cash flows from operating activities
----------------------------------------------- ------- -------
Profit/(loss) before taxation 2,518 (965)
----------------------------------------------- ------- -------
Adjustments for:
Interest income (150) (128)
----------------------------------------------- ------- -------
Equity-settled share option expense - (84)
----------------------------------------------- ------- -------
Interest expenses 149 305
----------------------------------------------- ------- -------
Bad debts and provision for doubtful debts 4,600 1,534
----------------------------------------------- ------- -------
Depreciation and amortisation expense 2,028 2,571
----------------------------------------------- ------- -------
Unrealised gain on derivative financial
instruments (8) (37)
----------------------------------------------- ------- -------
Gain on disposal of property, plant and
equipment - (98)
----------------------------------------------- ------- -------
Impairment on derecognition of financial
assets - 600
----------------------------------------------- ------- -------
Intangible assets written off 3,128 -
----------------------------------------------- ------- -------
Share of profits of associates (398) -
----------------------------------------------- ------- -------
Share of losses of a jointly controlled
entity 234 182
----------------------------------------------- ------- -------
Operating profit before changes in working
capital 12,101 3,880
----------------------------------------------- ------- -------
Decrease in amount due from customers for
contract work 4,828 31,137
----------------------------------------------- ------- -------
Decrease in trade and other receivables,
deposits and prepayment 42,062 17,376
----------------------------------------------- ------- -------
Increase in amount due to customers for
contract work 57 -
----------------------------------------------- ------- -------
Decrease in trade and other payables (64,087) (5,810)
----------------------------------------------- ------- -------
Increase/(decrease) in bills payable 1,883 (2,607)
----------------------------------------------- ------- -------
Cash (used in)/generated from operations (3,156) 43,976
----------------------------------------------- ------- -------
Interest received 150 128
----------------------------------------------- ------- -------
Interest paid (149) (305)
----------------------------------------------- ------- -------
Current income tax paid (664) (6,866)
----------------------------------------------- ------- -------
Net cash (used in)/generated from operating
activities (3,819) 36,933
----------------------------------------------- ------- -------
Cash flow from investing activities
----------------------------------------------- ------- -------
Purchases of property, plant and equipment (7) (41)
----------------------------------------------- ------- -------
Investment in an associate (13,640) (7,840)
----------------------------------------------- ------- -------
Loans to an associate - (7,350)
----------------------------------------------- ------- -------
Investment in a jointly controlled entity (660) -
----------------------------------------------- ------- -------
Net cash used in investing activities (14,307) (15,231)
----------------------------------------------- ------- -------
Cash flow from financing activities
----------------------------------------------- ------- -------
Repayment of bank loan - (15,000)
----------------------------------------------- ------- -------
Movement in restricted bank balances 4,147 (4,402)
----------------------------------------------- ------- -------
Net cash generated from/(used in) financing
activities 4,147 (19,402)
----------------------------------------------- ------- -------
Net (decrease)/increase in cash and cash
equivalents (13,979) 2,300
----------------------------------------------- ------- -------
Cash and cash equivalents as at 1 January 21,134 18,867
----------------------------------------------- ------- -------
Effect of foreign exchange rates changes
- net 74 (33)
----------------------------------------------- ------- -------
Cash and cash equivalents as at 31 December 7,229 21,134
----------------------------------------------- ------- -------
ANALYSIS OF CASH AND CASH EQUIVALENTS
Cash and bank balances 7,229 21,134
----------------------------------------------- ------- -------
Tinci Holdings Limited
Notes to consolidated financial statements
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 2011 or 2010. The statutory accounts for the year ended 31
December 2011 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 SEGMENTAL 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 2011 and 2010, 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 is set out below:-
Other income
2011 2010
RMB'000 RMB'000
----------------------------------------------- -------------------- -----------
Rental income, net of tax 692 246
----------------------------------------------- -------------------- -----------
Interest income 150 128
----------------------------------------------- -------------------- -----------
Gain on disposal of property, plant and
equipment - 98
----------------------------------------------- -------------------- -----------
Net (loss)/gains from derivative financial
instruments (47) 93
----------------------------------------------- -------------------- -----------
Miscellaneous 469 39
----------------------------------------------- -------------------- -----------
1,264 604
----------------------------------------------- -------------------- -----------
3. PROFIT/(LOSS) BEFORE TAXATION
2011 2010
This Profit/(loss) before taxation is arrived
at after charging / (crediting):- RMB'000 RMB'000
-------------------------------------------------- ----------- -----------
Auditor's remuneration 383 404
-------------------------------------------------- ----------- -----------
Staff costs
-------------------------------------------------- ----------- -----------
- Salaries and allowance 7,864 7,821
-------------------------------------------------- ----------- -----------
- Contribution to defined contribution
retirement plans 607 553
-------------------------------------------------- ----------- -----------
- Other benefits 203 166
-------------------------------------------------- ----------- -----------
- Employee share option benefits - (84)
-------------------------------------------------- ----------- -----------
8,674 8,456
-------------------------------------------------- ----------- -----------
Research and development expenses 445 539
-------------------------------------------------- ----------- -----------
Amortisation of land use rights 12 11
-------------------------------------------------- ----------- -----------
Depreciation 885 1,429
-------------------------------------------------- ----------- -----------
Amortisation of intangible assets 1,131 1,131
-------------------------------------------------- ----------- -----------
Bills discounting interest 149 -
-------------------------------------------------- ----------- -----------
Short-term bank loan interest - 305
-------------------------------------------------- ----------- -----------
Bad debts and provision for bad debts 4,600 1,534
-------------------------------------------------- ----------- -----------
Intangible assets written off 3,128 -
-------------------------------------------------- ----------- -----------
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.
Following the change of the legal form of Guangzhou 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 ended 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 and enterprise
income tax EIT with reduced EIT rate from 33% to 25% with effect
from 1 January 2008.
Under the New CIT Law, entities enjoying Tax Holiday will
continue to enjoy it until it expires. Accordingly Guangzhou Tinci
was subject to PRC EIT at a rate of 12.5% for the fiscal years 2008
to 2010.
In 2011, Guangzhou Tinci has been recognised as a "New High-tech
Enterprise." Qualified enterprises are entitled to preferential tax
benefits, including reduced EIT of 15% for at least 3 years.
Accordingly Guangzhou Tinci is subject to a reduced EIT rate of 15%
for the fiscal years 2011 to 2013.
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% (2010: 16.5%).
2011 2010
The tax charge comprises: RMB'000 RMB'000
----------------------------------------------------------- ----------- -----------
Current tax
PRC EIT
----------------------------------------------------------- ----------- -----------
- Current tax provided for the year 327 747
----------------------------------------------------------- ----------- -----------
- (Over)/under-provision in prior years (135) 233
----------------------------------------------------------- ----------- -----------
192 980
----------------------------------------------------------- ----------- -----------
Deferred taxation
Recognition and reversal of temporary difference 1,548 (382)
----------------------------------------------------------- ----------- -----------
1,740 598
----------------------------------------------------------- ----------- -----------
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/(loss) per share
Basic earnings/(loss) 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.
2011 2010
--------------------------------------------- ----------- --------------
Profit/(loss) attributable to equity holders
of the Company (RMB'000) 778 (1,563)
--------------------------------------------- ----------- --------------
Weighted average number of ordinary shares
in issue 52,950,041 52,950,041
--------------------------------------------- ----------- --------------
Earnings/(loss) per share (RMB Cents per
share) 1 (3)
--------------------------------------------- ----------- --------------
Diluted earnings/(loss) 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/(loss) 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/(loss) per share calculation for
the years ended 31 December 2011 and 2010.
6. SHARE CAPITAL
2011 2010
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
END
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