TIDMWCC
RNS Number : 8235P
West China Cement Limited
23 July 2010
THIS ANNOUNCEMENT IS NOT FOR PUBLICATION OR DISTRIBUTION TO PERSONS IN THE
UNITED STATES. ANY SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE U.S. SECURITIES ACT, AND MAY NOT BE OFFERED OR SOLD WITHOUT
REGISTRATION THEREUNDER OR PURSUANT TO AN AVAILABLE EXEMPTION THEREFROM. THE
INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN THE UNITED STATES OR IN ANY
OTHER JURISDICTIONS WHERE SUCH OFFER OR SALE IS NOT PERMITTED.
THIS ANNOUNCEMENT IS NOT BEING MADE AND MAY NOT BE DISTRIBUTED OR SENT INTO
AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION IF TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE LAWS OF SUCH JURISDICTION.
Posting of WPIP and HKEx listing Update
West China Cement Limited (the "Company" , together with its subsidiaries, the
"Group"), a leading cement producer in Shaanxi Province, People's Republic of
China is delighted to announce that, in connection with its proposed listing
(the "Hong Kong Listing") on the main board of The Stock Exchange of Hong Kong
Limited (the "HKEx"), the Company will be publishing a web proof information
pack (the "WPIP") on the website of the HKEx at
www.hkexnews.hk/reports/prelist/wpip_co_list.htm and on the Company's website at
www.westchinacement.com in the investor relations section on [X+] July 2010.
Unless otherwise defined herein or the context otherwise requires, capitalized
terms contained in this announcement shall have the same meaning as defined in
the WPIP.
The posting of a WPIP is normal practice in the Hong Kong market in advance of a
pre-marketing exercise, which may or may not lead to a fund raising. Depending
on our assessment of market conditions, the Company will consider a Hong Kong
Listing and a fund raising by issuance of new ordinary shares of the Company.
The Company will make an appropriate announcement of any possible fund raising
terms. Any fund raising would be to progress the Company's growth and
acquisition strategy, further details of which are set out in the section titled
'Future Plans' set out below. The Hong Kong Listing is likely to take place
between 6 August 2010 (the earliest possible HKEx Listing date) and 20 October
2010 and the final dates will be announced when they are confirmed.
The WPIP contains certain information on the Group, including but not limited to
the following:
· consolidated financial information for the four months ended 30 April
2010.
· indebtedness as at 30 April 2010 and 31 May 2010
· working capital as at 30 April 2010 and 31 May 2010
· profit estimate for the six months ended 30 June 2010
· production capacity as of 30 April 2010
· future plans
· proposed changes in the composition of the Board
FINANCIAL INFORMATION
For the four months ended 30 April 2010, the Company achieved revenue, operating
profit and net profit of RMB675.3 million, RMB242.5 million and RMB154.3
million, respectively, representing a growth of 93.3%, 75.8% and 69.9% compared
to the same period in 2009.
The following tables set forth the summary consolidated statements of
comprehensive income and summary consolidated cash flow statements for the years
ended 31 December 2007, 2008 and 2009 and the four months ended 30 April 2009
and 2010 and summary consolidated balance sheets as of 31 December 2007, 2008
and 2009 and 30 April 2010, extracted from the draft accountant's reportprepared
in accordance with International Financial Reporting Standards ("IFRS") set out
in Appendix I of the WPIP.
Summary consolidated statements of comprehensive income
+------------------------+-----------+-----------+------------+-------------+------------+
| | For the year ended 31 | Four months ended 30 |
| | December | April |
+------------------------+------------------------------------+--------------------------+
| | 2007 | 2008 | 2009 | 2009 | 2010 |
+------------------------+-----------+-----------+------------+-------------+------------+
| | RMB000 | RMB000 | RMB000 | RMB000 | RMB000 |
+------------------------+-----------+-----------+------------+-------------+------------+
| | | | | (unaudited) | |
+------------------------+-----------+-----------+------------+-------------+------------+
| Revenue | 525,929 | 866,126 | 1,516,766 | 349,421 | 675,309 |
+------------------------+-----------+-----------+------------+-------------+------------+
| Cost of sales | (350,165) | (556,073) | (878,087) | (198,537) | (429,710) |
+------------------------+-----------+-----------+------------+-------------+------------+
| Gross profit | 175,764 | 310,053 | 638,679 | 150,884 | 245,599 |
+------------------------+-----------+-----------+------------+-------------+------------+
| Selling and marketing | (9,796) | (12,018) | (15,064) | (4,745) | (6,082) |
| expenses | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| Administrative | (29,038) | (55,224) | (77,846) | (16,778) | (24,912) |
| expenses | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| Other income | 35,708 | 40,617 | 71,526 | 8,546 | 28,444 |
+------------------------+-----------+-----------+------------+-------------+------------+
| Other gains/(losses) - | 2,273 | (184) | (1,057) | 50 | (513) |
| net | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| Operating profit | 174,911 | 283,244 | 616,238 | 137,957 | 242,536 |
+------------------------+-----------+-----------+------------+-------------+------------+
| Finance income | 1,572 | 2,600 | 1,190 | 347 | 138 |
+------------------------+-----------+-----------+------------+-------------+------------+
| Finance costs | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| -- loss on redemption | - | - | (168,451) | - | - |
| of warrants | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| -- other finance costs | (26,210) | (28,115) | (73,830) | (39,855) | (58,582) |
+------------------------+-----------+-----------+------------+-------------+------------+
| Finance costs - net | (24,638) | (25,515) | (241,091) | (39,508) | (58,444) |
+------------------------+-----------+-----------+------------+-------------+------------+
| Profit before income | 150,273 | 257,729 | 375,147 | 98,449 | 184,092 |
| tax | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| Income tax expense | - | (11,566) | (44,687) | (7,626) | (29,798) |
+------------------------+-----------+-----------+------------+-------------+------------+
| Profit for the | 150,273 | 246,163 | 330,460 | 90,823 | 154,294 |
| year/period | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| Other comprehensive | - | - | - | - | - |
| Income /(expense) | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| Total comprehensive | 150,273 | 246,163 | 330,460 | 90,823 | 154,294 |
| income for the | | | | | |
| year/period | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| Attributable to | | | | | |
| shareholders | | | | | |
| of our Company | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| -- Shareholders of our | 150,273 | 246,163 | 330,460 | 90,823 | 153,074 |
| Company | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| -- Non-controlling | - | - | - | - | 1,220 |
| interests | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| Earnings per share for profit attributable to the shareholders of the |
| Company during the year/ period (expressed in Renminbi per share) |
| |
+----------------------------------------------------------------------------------------+
| Basic earnings per | 2.35 | 3.84 | 5.12 | 1.42 | 2.36 |
| share | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| Diluted earnings per | 2.33 | 3.83 | 5.07 | 1.42 | 2.34 |
| share | | | | | |
+------------------------+-----------+-----------+------------+-------------+------------+
| Dividends | - | - | - | - | - |
+------------------------+-----------+-----------+------------+-------------+------------+
Summary consolidated balance sheets
+----------------------------+-------------+-----------+-----------+-----------+-------------+
| | |
+----------------------------+---------------------------------------------------------------+
| | As at 31 December | As at 30 April |
+----------------------------+-------------------------------------+-------------------------+
| | 2007 | 2008 | 2009 | 2010 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| ASSETS | RMB000 | RMB000 | RMB000 | RMB000 |
| | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Non-current assets | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Property, plant and | 961,507 | 1,540,533 | 2,611,502 | 3,128,079 |
| equipment | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Land use rights | 17,806 | 76,521 | 124,571 | 178,412 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Mining rights | 25,500 | 27,907 | 46,373 | 45,681 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Other intangible assets | - | - | 65,104 | 64,413 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Deferred income tax assets | 12,364 | 798 | 13,540 | 13,540 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| | 1,017,177 | 1,645,759 | 2,861,090 | 3,430,125 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Current assets | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Inventories | 45,653 | 81,507 | 128,979 | 143,633 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Trade and other | 101,454 | 125,770 | 317,670 | 382,194 |
| receivables and | | | | |
| prepayments | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Cash and cash equivalents | 29,997 | 37,038 | 346,258 | 53,724 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Restricted cash | 24,336 | 35,999 | 19,582 | 9,415 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| | 201,440 | 280,314 | 812,489 | 588,966 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Total assets | 1,218,617 | 1,926,073 | 3,673,579 | 4,019,091 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| EQUITY | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Capital and reserves | | | | |
| attributable to | | | | |
| shareholders of our | | | | |
| Company | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Share capital | 96,811 | 96,811 | 97,623 | 98,634 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Share premium | 662,636 | 662,636 | 672,775 | 687,922 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Share options reserve | 5,228 | 6,708 | 5,439 | 686 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Reverse acquisition | (341,304) | (341,304) | (341,304) | (341,304) |
| reserve | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Statutory reserve | 36,420 | 63,163 | 118,140 | 118,140 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Retained earnings | 222,650 | 442,070 | 717,553 | 870,627 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| | 682,441 | 930,084 | 1,270,226 | 1,434,705 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Non-controlling interests | - | - | 25,000 | 26,220 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Total equity | 682,441 | 930,084 | 1,295,226 | 1,460,925 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| LIABILITIES | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Non-current liabilities | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Borrowings | 63,800 | 407,069 | 360,058 | 746,336 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Warrants classified as | - | 32,908 | - | - |
| liabilities | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Provisions for other | - | - | 6,265 | 6,389 |
| liabilities and charges | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Deferred income tax | - | - | 8,079 | 8,079 |
| liabilities | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Other liabilities | 13,487 | 17,317 | 117,049 | 143,539 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| | 77,287 | 457,294 | 491,451 | 904,343 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Current liabilities | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Trade and other payables | 186,536 | 269,511 | 559,395 | 898,450 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Current income tax | - | - | 38,639 | 35,715 |
| liabilities | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Borrowings | 272,353 | 269,184 | 1,288,868 | 719,658 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| | 458,889 | 538,695 | 1,886,902 | 1,653,823 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Total liabilities | 536,176 | 995,989 | 2,378,353 | 2,558,166 |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Total equity and | 1,218,617 | 1,926,073 | 3,673,579 | 4,019,091 |
| liabilities | | | | |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Net current liabilities | (257,449) | (258,381) | (1,074,413) | (1,064,857) |
+----------------------------+-------------+-----------+-----------------------+-------------+
| Total assets less current | 759,728 | 1,387,378 | 1,786,677 | 2,365,268 |
| liabilities | | | | |
+----------------------------+-------------+-----------+-----------+-----------+-------------+
Summary consolidated cash flow statements
+------------------------+-----------+-----------+------------+-------------+-----------+
| | For the year ended 31 | Four months ended 30 |
| | December | April |
+------------------------+------------------------------------+-------------------------+
| | 2007 | 2008 | 2009 | 2009 | 2010 |
+------------------------+-----------+-----------+------------+-------------+-----------+
| | | RMB000 | RMB000 | RMB000 | RMB000 |
+------------------------+-----------+-----------+------------+-------------+-----------+
| | | | | (Unaudited) | |
+------------------------+-----------+-----------+------------+-------------+-----------+
| Net cash generated | 170,969 | 323,092 | 619,676 | 229,236 | 261,572 |
| from | | | | | |
| operating activities | | | | | |
+------------------------+-----------+-----------+------------+-------------+-----------+
| Net cash used in | (355,395) | (667,923) | (847,503) | (250,590) | (373,978) |
| investing activities | | | | | |
+------------------------+-----------+-----------+------------+-------------+-----------+
| Net cash generated | 22,034 | 351,872 | 537,047 | 82,460 | (180,128) |
| from/(used | | | | | |
| in)financing | | | | | |
| activities | | | | | |
+------------------------+-----------+-----------+------------+-------------+-----------+
| Net | (162,392) | 7,041 | 309,220 | 61,106 | (292,534) |
| (decrease)/increase in | | | | | |
| cash and cash | | | | | |
| Equivalents | | | | | |
+------------------------+-----------+-----------+------------+-------------+-----------+
| Cash and cash | 192,389 | 29,997 | 37,038 | 37,038 | 346,258 |
| equivalents at | | | | | |
| beginning of | | | | | |
| year/period | | | | | |
+------------------------+-----------+-----------+------------+-------------+-----------+
| Cash and cash | 29,997 | 37,038 | 346,258 | 98,144 | 53,724 |
| equivalents at end of | | | | | |
| year/period | | | | | |
+------------------------+-----------+-----------+------------+-------------+-----------+
INDEBTEDNESS AS AT 30 APRIL 2010 AND 31 MAY 2010
The Company has financed its operations primarily through cash flows generated
from operations and short-term and long-term loans from banks. The table below
sets out the Company's short-term and long-term borrowings as of 30 April 2010
extracted from the draft accountant's report and 31 May 2010 :
+-------------------------------+--------------------+-----------+
| | As of 30 April | As of 31 |
| | | May |
+-------------------------------+--------------------+-----------+
| | 2010 | 2010 |
+-------------------------------+--------------------+-----------+
| Borrowings repayable: | RMB'000 | RMB'000 |
+-------------------------------+--------------------+-----------+
| Bank borrowings: | | |
+-------------------------------+--------------------+-----------+
| Within 6 months or less | 332,829 | 310,929 |
+-------------------------------+--------------------+-----------+
| After 6 months but within 12 | 386,829 | 468,729 |
| months | | |
+-------------------------------+--------------------+-----------+
| After 1 year but within 2 | 639,654 | 643,256 |
| years | | |
+-------------------------------+--------------------+-----------+
| After 2 years but within 5 | 85,682 | 87,727 |
| years | | |
+-------------------------------+--------------------+-----------+
| Sub-total: | 1,444,994 | 1,510,641 |
+-------------------------------+--------------------+-----------+
| Other borrowings: | | |
+-------------------------------+--------------------+-----------+
| Within 6 months or less | - | - |
+-------------------------------+--------------------+-----------+
| After 6 months but within 12 | - | - |
| months | | |
+-------------------------------+--------------------+-----------+
| After 1 year but within 2 | 18,000 | 18,000 |
| years | | |
+-------------------------------+--------------------+-----------+
| After 2 years but within 5 | 3,000 | 3,000 |
| years | | |
+-------------------------------+--------------------+-----------+
| Sub-total: | 21,000 | 21,000 |
+-------------------------------+--------------------+-----------+
| Total | 1,465,994 | 1,531,641 |
+-------------------------------+--------------------+-----------+
WORKING CAPITAL AS AT 30 APRIL 2010 AND 31 MAY 2010
The table below sets out the Company's current assets and current liabilities as
of 30 April 2010 extracted from the draft accountant's report and 31 May 2010 :
+------------------------------+--------------------+-------------+
| | As of 30 April | As of 31 |
| | | May |
+------------------------------+--------------------+-------------+
| | 2010 | 2010 |
+------------------------------+--------------------+-------------+
| | RMB'000 | RMB'000 |
+------------------------------+--------------------+-------------+
| Current Assets | | |
+------------------------------+--------------------+-------------+
| Inventories | 143,633 | 154,041 |
+------------------------------+--------------------+-------------+
| Trade and other receivables | 382,194 | 390,784 |
| and prepayments | | |
+------------------------------+--------------------+-------------+
| Cash and bank balances | 53,724 | 48,402 |
+------------------------------+--------------------+-------------+
| Restricted cash | 9,415 | 9,415 |
+------------------------------+--------------------+-------------+
| Total current assets | 588,966 | 602,642 |
+------------------------------+--------------------+-------------+
| | | |
| Current liabilities | | |
+------------------------------+--------------------+-------------+
| Trade and other payables | 898,450 | 802,824 |
+------------------------------+--------------------+-------------+
| Current income tax | 35,715 | 41,490 |
| liabilities | | |
+------------------------------+--------------------+-------------+
| Borrowings | 719,658 | 779,700 |
+------------------------------+--------------------+-------------+
| Total current liabilities | 1,653,823 | 1,624,014 |
+------------------------------+--------------------+-------------+
| Net current liabilities | 1,064,857 | 1,021,372 |
+------------------------------+--------------------+-------------+
The Company's net current liabilities as of 30 April 2010 and 31 May 2010 were
approximately RMB1,064.9 million and RMB 1,021.4 million respectively.
The Company had current assets of approximately RMB589.0 million as of 30 April
2010, including trade and other receivables and prepayments of approximately
RMB382.2 million, inventories of approximately RMB143.6 million and cash and
bank deposit of approximately RMB53.7 million. As of April 30, 2010, the Company
had current liabilities of approximately RMB1,653.8 million, including trade and
other payables of approximately RMB898.5 million, current borrowings of
approximately RMB719.7 million and current income tax liabilities of
approximately RMB35.7 million.
As of 31 May 2010, the Company had current assets of approximately RMB602.6
million including cash, restricted cash and bank deposit of approximately
RMB57.8 million and had current liabilities of approximately RMB1,624.0 million.
Current borrowing has decreased from RMB1,288.9 million as of 31 December 2009
to RMB779.7 million as of 31 May 2010. A maximum of RMB300.0 million loans with
Agriculture Bank of China may be rolled over for a new term pursuant to a credit
limit arrangement between the Company and Agriculture Bank of China.
The Company's net current liabilities as of 31 May 2010 were approximately
RMB1,021.4 million. Compared to 31 December, 2009, the Company's net current
liabilities position has not changed substantially, despite the Company's
reduced current borrowings. This is primarily due to a decrease in cash balance
as a result of the payment the Company made to contractors for the new
production lines in Pucheng and Mianxian, which had an effect of reducing
current assets but increasing non-current assets. At the same time, there was an
increase of trade and other payables as of 31 May 2010, primarily attributable
to an increase in amounts paid to construction contractors.
PROFIT ESTIMATE FOR THE SIX MONTHS ENDED 30 JUNE 2010
The WPIP contains the profit estimate for the six months ended 30 June 2010. The
Company believes that, in the absence of unforeseen circumstances and on the
bases and assumptions set out below, the estimated consolidated profit
attributable to the equity shareholders for the six months ended 30 June 2010 is
likely to be not less than RMB307million under IFRS.
The profit estimate has been prepared based on the consolidated results of the
Group for the four months ended 30 April 2010 as set out in the draft
accountant's report in the WPIP, the unaudited consolidated results of the Group
for the one month ended 31 May 2010 based on the management accounts and an
estimate of the consolidated results of the Group for the one month ended 30
June 2010. The accounting policies adopted in preparing the profit estimate are
set out in note 2 of section II of the draft accountant's report set out in
Appendix I of the WPIP which are in compliance with IFRS.
The principal assumptions upon which the profit estimate is based are:
· there will be no material changes in the existing rules, laws,
regulations, or government policies (economic, political or legal), including
changes in legislation or rules, regulatory, fiscal, economic or market
conditions in the PRC, Hong Kong, Jersey, the British Virgin Islands, or any of
the countries in which members of the Group currently operate or are
established;
· there will be no material changes in inflation rate, interest rate or
foreign currency exchange rate in the countries, regions or industries
applicable to the business activities of the Group from those presently
prevailing;
· there will be no material changes in the bases or rates of taxation or
duties in the PRC, Hong
Kong, Jersey, the British Virgin Islands, or any of the countries in which
members of the Group operate or are established, except as otherwise disclosed
in the WPIP;
· there will be no wars, military incidents, pandemic diseases or natural
disasters that would have a material impact on the Group's business and
operating activities;
· the Group's operations and financial performance will not be materially
and adversely impacted by any of the risk factors set out in the section headed
"Risk Factors" in the WPIP;
· the Group's production and operation will not be significantly affected
by interruptions as a result of shortage of coal supply, electricity supply,
labour disputes, technical barrier and any other reasons that are beyond the
control of the Directors; and
· there will be no changes in technology, industry, safety standards, and
environmental protection regulations in connection with the cement products that
would have a significant negative impact on the Group's operation in the PRC,
Hong Kong, Jersey, the British Virgin Islands, any of the countries in which
members of the Group currently operate or are established.
The directorsconfirm that the profit estimate has been properly compiled and has
been prepared after due and careful enquiry on the basis of the Group's
accounting policies as set out in note 2 of section II of the draft accountant's
report set out in Appendix I of the WPIP which are in compliance with IFRS. The
profit estimate has been compiled on a basis that is comparable with historical
financial information provided by the Company.
PRODUCTION CAPACITY AS OF 30 APRIL 2010
The Company had seven cement production lines located in Shaanxi province, with
a total annual production capacity of 8.5 million tons as of 30 April 2010.
FUTURE PLANS
In order to meet the fast growing market demand for cement products, the Company
plans to further expand its production capacity through acquisitions of
additional production facilities and construction of new production facilities.
The Company intends to actively pursue acquisition opportunities that will
enable penetration of other markets adjacent to current core markets, such as
selected markets in other parts of southern Shaanxi province, Gansu province or
Sichuan province. Any future acquisitions will depend on finding suitable
targets and negotiation with the relevant parties.
The Company recently completed the construction of a production line in Mianxian
county with a production capacity of 1.1 million tons. The Company plans to
construct two new production lines in Pucheng and Xixiang counties,
respectively, in Shaanxi province with a total annual production capacity of 2.2
million tons and are also installing a new cement grinding mill in the Lantian
production facility, which is expected to increase production capacity by 0.7
million tons. These additional production facilities are expected to increase
aggregate production capacity to 12.5 million tons.
The table below sets forth the details of the two production lines currently in
construction:
+--------------+------------+------------------+-------------+-------------+-------------+
| Production | Planned | Target | Total | Actual | Estimated |
| Lines | Annual | Production | Budgeted | Capital | Capital |
| Under | Production | Commencement | Capital | Expenditure | Expenditure |
| Construction | Capacity | Date | Expenditure | Incurred as | in Future |
| | | | | of 30 April | |
| | | | | 2010 | |
+--------------+------------+------------------+-------------+-------------+-------------+
| | (in | | (RMB' | (RMB' | (RMB' |
| | million | | millions) | millions) | millions) |
| | tons) | | | | |
+--------------+------------+------------------+-------------+-------------+-------------+
| Pucheng | 1.1 | August/September | 330-380 | 164 | 166-216 |
| | | 2010 | | | |
+--------------+------------+------------------+-------------+-------------+-------------+
| Xixiang | 1.1 | January/February | 370-420 | 57 | 313-363 |
| | | 2011 | | | |
+--------------+------------+------------------+-------------+-------------+-------------+
On 31 October 2009, Shaanxi Yaobai, Shaanxi Ankang Jianghua Group Cement Co.,
Ltd., or Jianghua Cement, and its shareholder entered into a non-binding
memorandum of understanding for the proposed acquisition by Shaanxi Yaobai of
100% of the registered capital of Jianghua Cement. Jianghua Cement is a cement
producer located in Ankang which operates one cement production line with a
total annual production capacity of approximately 1.1 million tons of cement.
According to Digital Cement Net, Jianghua Cement ranked 9th in Shaanxi Province
in terms of cement production capacity in 2009.
Jianghua Cement and its shareholder agreed to negotiate exclusively with the
Company before 31 December 2009 relating to the sale of its equity interests and
the Company paid a deposit in the amount of RMB100 million to Jianghua Cement to
secure exclusivity in such negotiation. On 25 January 2010, Shaanxi Yaobai,
Jianghua Cement and its shareholder entered into an extension agreement to
extend the exclusivity period to 31 December 2010. This proposed acquisition is
subject to the Company's satisfactory legal and financial due diligence of
Jianghua Cement. Under the terms of the extension agreement, Jianghua Cement
will refund the RMB100 million deposit if the Company decides to cease the
negotiations or if no definitive acquisition agreement is entered into with
Jianghua Cement within the exclusivity period.
The executive Directors are of the view that acquisition of Jianghua Cement will
enlarge the Group's
market share and consolidate the Group's leading position in Ankang in Shaanxi
province as Jianghua Cement is the only other major cement producer adopting NSP
technology in Ankang. The estimated total consideration for the acquisition of
Jianghua Cement is approximately RMB650 million. The Company plans to make its
final decision on the acquisition on or before 31 December 2010.
In addition the Company intends to install residual heat recovery systems at
production facilities at Pucheng, Zhen'an, Yangxian, Danfeng and Mianxian,
upgrade current production facilities at Zhen'an and Danfeng, and to inject
further capital into Longqiao Yaobai.
The first phase upgrade of the Zhen'an production facilities are expected to
complete in 2010 while upgrade of the Company's Danfeng production facilities
and installation of additional residual heat recovery systems will commence in
the same year. The first phase upgrade of the Zhen'an production facilities are
directed towards improvement of environmental protection related equipment,
enhancement of energy efficiency and production safety measures. The second
phase upgrade of the Zhen'an production facilities will increase its clinker
production capacity from 1,500 t/d to 2,500 t/d. The Company's plans for the
upgrade of the production facilities at Danfeng will mainly focus on its ability
to recycle industrial waste, industrial by-products and construction waste to
produce cement and the residual heat recovery system and the details of such
upgrade should be finalized by end of 2010.
CHANGES IN BOARD COMPOSITION
The Company's Directors believe that it will be better served with a board
composed of members with strong knowledge of the PRC business environment and
the Hong Kong capital markets upon the Hong Kong Listing. In view of the
foregoing, each of Mr. Robert Sinclair Robertson and Mr. Brett Lance Miller will
resign from the Board and three new independent non-executive Directors, namely
Mr. Lee Kong Wai Conway, Mr. Wong Kun Kau and Mr. Tam King Ching Kenny, who have
a strong knowledge of the PRC and Hong Kong business and market environment,
will be appointed in place of Mr. Robert Sinclair Robertson and Mr. Brett Lance
Miller. Given that Mr. Robert Sinclair Robertson and Mr. Brett Lance Miller only
assumed non-executive roles in the Company and were not involved in the
day-to-day management or affairs and operations of the Company's business prior
to their resignations and that high calibre Hong Kong based non-executive
directors will be appointed in their place the Company's Directors are of the
view that there will be no adverse impact on the Company's business and
operations in respect of the resignations of Mr. Robert Sinclair Robertson and
Mr. Brett Lance Miller.
In addition, Mr. Tian Zhenjun, who was a former executive Director of the
Company and resigned in October 2008, was re-appointed as an executive Director
of the Company on 20 May 2010. Mr. Tian Zhenjun was with the Group throughout
the Track Record Period despite his resignation from the Board in October 2008
as he remained as a senior management of the Company's Group focusing on the
overall management and operation of Lantian Yaobai which had just commenced
operation at that relevant time. In view of the Company's rapid expansion in
recent years and given that stable operation has been achieved at Lantian
Yaobai, the Directors consider that it is in the best interests of the Company
to re-appoint Mr. Tian as executive Director to oversee the overall
administrative, human resources and operational management functions.
In view of his academic knowledge and extensive experience in strategic
planning, Mr. Ma Zhaoyang will also be appointed a non-executive Director of the
Company on the Hong Kong Listing and will assume an advisory role in respect of
the overall strategic planning and operation of the business.
This announcement may not contain all material information that is included in
the WPIP. The WPIP should be read as a whole and investors should not rely
solely on the information contained in this announcement. .
TIMING AND SHAREHOLDER APPROVAL
By way of background, on 31 March 2010 the shareholders of the Company passed a
resolution at the Company's Annual General Meeting to approve the cancellation
of the admission of the Company's Ordinary Shares to trading on AIM (the
'De-Listing') at the same time as the proposed Hong KongListing becomes
effective. The AGM Circular of the Company dated 5 March 2010 explained the
background to and reasons for the De-Listing and the Hong Kong Listing, and
included a statement that, in the event that the Hong Kong Listing did not occur
within three months following the date of the AGM, the Company would seek a
further shareholders' resolution to approve the De-Listing if the Directors
still believed that it was in the best interests of the Company to proceed with
the De-Listing and the Hong Kong Listing. On 2 July 2010, the Company convened
an Extraordinary General Meeting which was held on 20 July 2010 ('EGM'). At the
EGM, Shareholders approved resolutions, amongst others, to renew the authority
granted by the shareholders for the De-Listing (the 'De-Listing Resolution').
The EGM resolution to approve the De-Listing allow the De-Listing to occur
within a three month period from 20th July 2010 until 20th October 2010.
However, it is expected that the earliest possible date that the Hong Kong
Listing may occur is 6 August 2010. The timing of the De-Listing is contingent
upon the timing of the Hong KongListing, which is subject to fulfilment of
certain conditions, and the Hong Kong Listing will occur on the first trading
day on the Hong Kong following the last day of trading of the Shares on AIM. The
Hong Kong Listing is subject, inter alia, to the HKEx confirming no further
comments on the prospectus of the Company and granting formal listing approval.
The Company will make an appropriate announcement and the final dates will be
announced not less than ten clear business days in advance of the relevant date.
For further information, please contact:
West China Cement Limited
Po Ling Low, Tel: +86 139 1088 6649
Anthony Schindler, Tel: +44 7710 178928
NCB Stockbrokers Limited
Christopher Caldwell, Tel: +44 20 7071 5200
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND ESTIMATES
This announcement contains certain forward-looking statements and estimates with
respect to the financial condition, results of operations and business of the
Group and certain plans and objectives of the Board of the Company with respect
thereto. These forward-looking statements and estimates can be identified by the
fact that they do not relate only to historical or current facts.
Forward-looking statements often use words such as 'anticipate', 'target',
'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'will', 'may',
'should', 'would', 'could' or other words of similar meaning. These statements
are based on estimates, assumptions and assessments made by the Board in light
of their experience and their perception of historical trends, current
conditions, expected future developments and other factors they believe
appropriate. By their nature, forward-looking statements and estimates involve
risk and uncertainty, because they relate to events and depend on circumstances
that will or may occur in the future and the factors described in the context of
such forward-looking statements in this announcement could cause actual results
and developments to differ materially from those expressed in or implied by such
forward-looking statements or estimates. Although the Group and the persons who
have accepted responsibility for the information contained in this announcement
believe that the expectations reflected in their respective forward-looking
statements or estimates are reasonable, they can give no assurance that such
expectations will prove to have been correct and the Group and the persons who
have accepted responsibility for the information contained in this announcement
therefore caution you not to place undue reliance on these forward-looking
statements or estimates which speak only as at the date of this announcement.
OVERSEAS JURISDICTIONS
The release, publication or distribution of this announcement in jurisdictions
other than the United Kingdom may be affected by the laws of the relevant
jurisdictions in which they are located or of which they are citizens. Such
persons (including, without limitation, nominees, trustees and custodians)
should inform themselves of, and observe, any applicable legal or regulatory
requirements of their jurisdictions.
This announcement is not intended to, and does not constitute, or form part of,
an offer to sell, purchase, exchange or subscribe for or a solicitation of an
offer to sell, purchase or exchange any securities or a solicitation of any vote
or approval in any jurisdiction. This announcement does not constitute a
prospectus or a prospectus equivalent document in any jurisdiction.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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