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Gowin New Energy Grp (GWIN)

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Tuesday 02 June, 2015

Gowin New Energy Grp

Unaudited Annual Results 31 December 2014

RNS Number : 9591O
Gowin New Energy Group Limited
02 June 2015
 



2 June 2015

 

Gowin New Energy Group Limited

("Gowin" or the "Company")

 

Unaudited Annual Results for the year ended 31 December 2014

 

Gowin New Energy Group Limited is pleased to announce its unaudited annual results for year ended 31 December 2014. Alexander David Securities Limited confirms that other than as disclosed in the unaudited annual results, we are not aware of any reason for material differences between the unaudited and audited annual results.

 

Chairman's statement

China's LED Market

In China, LEDs continue to gain more importance due to their power and luminous efficacy. Governments (central and provincial) also support the adoption of LED lighting to a large extent. China's energy savings focus and emerging carbon emission trading systems are key drivers for LED lighting solutions. Therefore, China continues to be one of the largest potential markets for LED lighting. The key end-user segments are the Commercial, Industrial, Outdoor, and Residential segments.

The central government's 12th Five-Year Plan (2012-2016) initiatives are well known.  China's Ministry of Finance (MOF) and National Development and Reform Commission (NDRC) jointly published "Interim Measures on Administration of Financial Subsidies for Promoting High-Efficiency Lighting Products." The measures included financial subsidies to promote compact fluorescent lamps (CFLs), LEDs and other highly energy efficient lighting.

Local governments have been much quicker than China's central government in implementing LED subsidies. For example, Guangdong Province, which has the largest LED industry size in China, has the highest amount of subsidies (in areas such as epiwafer, chips, package, applications, substrates, and materials and other key industries or new expansion or equipment investments) and initiatives whereby power costs saved by LEDs are all used to subsidise construction projects. At the same time, "Shanghai's 12th five-year plan for semiconductor lighting and industry development" proposed to upgrade 20 percent of Shanghai's 40,000 streetlights to LED. Other provinces have their own subsidy programs including more and more second tier cities.

It's clear that China's LED industry is still in its early stages, and the lighting industry is facing a difficult transition. The high number of energy efficient subsidies is creating oversupply issues as manufacturers pour more investments into the industry. Additionally, immature LED lighting standards and poor interchangeability between different product brands can result in bad quality products driving out good ones - so industry quality concerns are now coming into focus. 

In summary, the LED industry in China faces obstacles such as industry upgrade, lack of market regulations and production management difficulties. LED companies face risks of sliding market share and profit margins if they are unable to release attractive products to gain market share, and overtake competitors in R&D.

So, as LED inside (a research division of TrendForce) notes, for many LED makers, 2014 has been a challenging year, with performance in the first and second halves of the year very polarised.  Lighting market demand was stronger than expected in first-half 2014, leading to a period of LED supply shortages at that time. As the year unfolded it was impacted by clients double booking plus distributors rising inventory levels during second-half 2014. Many manufacturers were impacted by the market's cooling demand, and consequently price competition. Also, the emergence of Chinese LED makers has led to sliding LED product prices. Hence, according to LEDinside, successful LED makers will have to raise technology entry levels and find new applications in the hope of boosting profitability in 2015 and beyond. 

 



Gowin - 2014 Performance Overview

The Group's strategy in 2014 was to leverage its R&D advantage, pursue special lighting niche markets, to engage more selectively in China street lighting projects and to direct more sales to international exports in special lighting and where terms of trade were more favourable regarding cash conversion cycle.

After an encouraging first half of the year, from both sales and collections perspectives, working capital constraints significantly worsened due a deteriorating accounts receivable position primarily in the outdoor (street lighting) segment in China. Additionally, the Board worked very closely with potential financiers even to the extent of drafting subscriptions, warrants and convertible bonds agreements over a period of several months before the key financier realised it needed to delay its investment due to its own liquidity challenges.

In parallel, the Group was working diligently on new export market opportunities, including major retailing brands. These activities were expected to result in 2014 contracts, but were delayed because of working capital constraints and longer than anticipated pilot and prototype cycle times in part because of the Group's requirement to meet new regulatory requirements in overseas markets.    

Financial Results

During the financial year ended 31 December 2014, despite an encouraging first half of the year, the Group recorded a significant drop in revenue amounting to RMB 100 million (2013: RMB 161 million). The reduction in revenue was impacted from working capital constraints and longer than anticipated pre-sales cycles for new international markets projects. The Group recorded a loss after tax for the financial year ended 31 December 2014 amounting to RMB 34 million (2013: RMB 19 million profit).

The outdoor lighting segment comprised around 75% of the total 2014 revenues. Total exports increased to 11% of total revenues. As for the profit margin, the declining selling prices coupling with higher labor and production costs, GP declined to 10.3% (2013: 21%) 10% below budget.

The Group's major operating expenses, comprising research and development and administration, amounted to RMB 15.5 million (2013: RMB 11.6 million). Such expenses mainly comprised (i) research and development expenses to the sum of RMB 2.8 million (2013: RMB 3.3 million); (ii) staff salaries and social security expenses to the sum of RMB 5.6 million (2013: RMB 4.8 million); and other selling and administrative expenses to the sum of RMB6.4 million (2013: RMB 2.5 million). The Group had developed a plan to strengthen its business controls and streamline its operation process to be executed in the coming financial year.

The basic and diluted Earnings/(Loss) per Share is RMB -0.1 (2013: RMB 0.08).

Dividend

In line with the Group's below target performance in 2014, the Board is recommending no dividend payment for the year.

Key Developments

Although there were no regulatory or compliance issues with Gowin on the AIM market, the Group's AIM Nominated Advisor (NOMAD) resigned effective 27 February 2015 which resulted in the Group's shares being cancelled on AIM on 30 March 2015.

In the meantime, Gowin shares were also listed for trading on the ISDX Growth Market with effect 26 February, 2015.  

The Group is committed to a successful transformation of its business and productive and responsible journey on ISDX. Since February 2015, the Group has made a number of announcements regarding attraction of new Taiwan investors through subscription of new shares in the business and preliminary business transformation steps.    

Corporate Governance

The Board worked very diligently and cooperatively with management and staff in its ongoing focus on business survival, fund raising and business reviews. The Board instituted regular Audit Committee meetings in 2014, designed to add value to management in the attainment of the highest standards of financial management.

It is pleasing to note that the Board was stable and united in 2014 and never gave up on its duty of care emphasis to shareholders in the midst of a disappointing second half 2014 performance that was well below expectation and plan.

The Board continued to observe the principles of the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies 2013, with focus on 12 principles and a set of minimum disclosures.

The Board has recommitted itself to a strong agenda on business strategy, aimed at ensuring the Group maintains and increases its differentiation in the market place, focus on niche markets, enhancing export sales and increasing the quality and scale of its clients and eco-system of partners along with its products and service delivery. Gowin had adopt Porter's Five Forces Model in evaluating and determining the Board's strategic focus and decision making.

Corporate Governance (continued)

Mr Luke Webster, independent non-executive director, resigned from the Board on 28 January 2015. The Board is very grateful for the contributions he made and the wisdom he offered in his important role as a London based non-executive director of the Company.  

Current Trading Outlook

On 28 January 2015, the Group was pleased to announce that it had conditionally raised £1.2 million by way of an institutional subscription and a convertible loan from Mr Chen Chih-Lung. At an extraordinary general meeting (EGM) on 16 February 2015, the convertible loan converted to 60 million new shares in the Company. On 15 April 2015, Mr Chen Chih-Lung subscribed to a further 40 million shares in the Company.

Mr Chen, along with another non-executive director Mr Chou Huan-Nan, had joint the Board of Gowin and Mr Chen was appoint CEO replacing Julian Hsieh t to take the rein to lead Gowin moving forward. .

A transformation agenda is unfolding, which will take root as 2015 progresses and will be incrementally announced during 2015. A new business model, a board comprising stronger representation from non-executive directors and new senior management is anticipated.       

As announced on 28 February 2015, the Group will leverage Choice Only International Ent. Co., Ltd, ("Choice"), a Taiwan-based company engaged in the design and manufacturing of digital storage devices, to penetrate the exciting new consumer segment market for LED products. Additional "Choice" like distribution channels are anticipated in 2015.   

The Group expects its emphasis on export business growth to yield results in 2015.

The Group continues to be committed to its traditional focus on research and development and is striving for leadership in special lighting products including automobile lighting and trendy consumer products.

The Group realizes it must enhance focus on quality and cost effectiveness in line with customer demands in a maturing and competitive LED market.

The Group must improve its working capital adequacy and efficiency, including reducing its cash conversion cycle by better controlling credit terms and cooperating with financial institutions on debt collection and account receivables financing.

Notes of Appreciation

I wish to thank the Board of Directors for their unceasing endeavours during difficult and high-pressured times. We are grateful to our loyal shareholders, customers and business partners for their unfailing support and trust. On behalf of the Board and senior management, I would especially like to extend our sincere appreciation to all our staff that made significant sacrifices during a very difficult year. Hopefully, 2014 is a pivotal learning year for the Group. Whilst I remain Chairman of this Board, be assured of my personal commitment to staff and shareholders and doing what I can to improving the business in all respects and over time seeking to generate momentum in earnings growth and sustainability.  

 

Garry Willinge

Non-Executive Chairman

2 June 2015

 

The unaudited annual results are prepared in accordance with International Financial Reporting Standards (IFRS). The financial information contained in this statement, relating to the year ended 31 December 2014, has not been audited or reviewed by the Company's auditors and does not constitute statutory accounts. A copy of the Company's audited financial statements for the year ended 31 August 2014 will be posted to shareholders as soon as the audit is complete together with a notice of Annual General Meeting. 

 

The directors of Gowin New Energy Group Limited accept responsibility for this announcement.

 

For further information please visit www.gowinyichia.com or contact the following:

Garry Willinge                                                   Gowin New Energy Group Limited                          +852 9100 9972

David Scott / James Dewhurst                   Alexander David Securities Limited                        +44 20 7448 9820

 

 

GOWIN NEW ENERGY GROUP LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2014            

 



 

Unaudited

 

Audited



Year ended

Year ended


Note

31 December

2014

31 December

2013

Continuing Operations


RMB'000

RMB'000

Revenue

7

      100,123

161,842

Cost of sales

11

       (89,739)

(127,909)

Gross profit


       10,384

33,933

Operating expenses




Research and development expenses


        (2,823)

(3,320)

Administrative expenses


      (12,670)

(8,233)

Impairment of Accounts Receivables

21

      (24,728)

-

Other income

9

            101

397

Gain on foreign exchange


              -  

32

Operating (loss) / profit


      (29,736)

22,809





Finance income

10

            692

731

Finance cost

10

          (881)

(1,495)





(Loss) / Profit before tax


      (29,925)

22,045

Tax

13

        (3,622)

(3,023)

 

(Loss) / Profit for the year attributable to owners of the parent


(33,547)

19,022

Other Comprehensive Income


-

-

 

Total Comprehensive Income for the year attributable to owners of the parent


 

 

 (33,547)

19,022





Earnings per share attributable to owners of the parent during the year expressed in RMB per share




Basic and diluted earnings per share

15

(0.1)

0.08

 

 

GOWIN NEW ENERGY GROUP LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 31 DECEMBER 2014



Unaudited

Audited



Year ended

Year ended



31 December

31 December



2014

2013


Note

RMB'000

RMB'000

ASSETS




NON-CURRENT ASSETS          




Property, plant and equipment

17

16,126

16,404

Deferred tax assets

19

194

194

Non-current trade receivables

21

-  

18,273

Total Non-Current Assets


16,320

34,871





CURRENT ASSETS




Inventories

20

13,780

33,398

Trade and other receivables

21

114,118

90,979

Cash and cash equivalents

22

89

1,084

Total Current Assets


127,987

125,461





LIABILITIES




CURRENT LIABILITIES




Trade and other payables

23

95,182

77,151

Bank borrowings

24

7,689

7,689

Total Current Liabilities


102,871

84,840

Net Current Assets


25,116

40,621





NON-CURRENT LIABILITIES




Non-current trade payables

23

12,459

12,968

NET ASSETS


28,977

62,524





Equity attributable to owners of the parent




Share capital

25

34,571

34,571

Share premium


14,677

14,677

Reverse acquisition reserve


(10,049)

(10,049)

Retained earnings


(10,222)

23,325



28,977

62,524

 

 

GOWIN NEW ENERGY GROUP LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2014

 

Unaudited

 

Audited

 

 

Year ended
31 December
2014


Year ended
31 December
2013


GBP

 

GBP

Profit/(Loss) before tax

(141,671)


(141,930)

Adjustment:




Other income

0


(70,639)

Depreciation

22,522


12,200

Operating profit/(loss)

(119,149)


(200,369)





Cash flows from operating activities




(Increase)/decrease in trade and other receivables

1,053


(1,694)

Increase/(decrease) in trade and other payables

(21,642)


44,441

Cash utilised in operations


(139,738)


(157,622)






Cash flows from investing activities




Proceeds from disposal of investment in Ford Eagle Capital Limited

0


(93,302)

Payment made to leasehold improvement

0


(62,876)

Bank interest received

0


2





Net cash from investing activities

0


(156,176)





Cash flows from financing activities




Issue of new shares

0


406,367

Unsecured loans

0


80,300

Proceed from loans from related parties

0


(46,562)

Interest paid

0


(8,800)





Net cash from financing activities

0


431,305





(Decrease)/increase in cash and cash equivalents

(139,738)


117,507

Cash and cash equivalents at the beginning of the period


199,148


80,341

Effect of foreign exchange rate

0


1,300





Cash and cash equivalents at end of period


59,410


199,148

 


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