The Group went from strength to strength and recorded an increase in profit from $S17.3 million to $S17.9 million for the year in review

OVERVIEW

In FY2009, the impact of the global downturn continued to be felt by all industries. Although stimulus packages have been implemented across the globe, yet most businesses are still facing immense challenges in recovering from the global downturn.

Despite a challenging year, the prudent management, in the clean and renewable energy sector, has led to positive results for Asia Power in FY2009. The Group went from strength to strength and recorded an increase in profit from S$17.3 million to S$17.9 million for the year in review. The increase of approximately 3.3% was mainly due to higher revenue from coal-fired power plant operations. Amidst difficult times, the Group still evinced strong investors’ interest and raised S$9.3 million from the placement of 60 million new ordinary shares in the year.

REVIEW

  1. The Group recorded a positive performance from its power plant segment with revenue increasing by S$7.9 million to reach S$140.3 million in FY2009, up from S$132.4 million in FY2008. Operating profit registered a growth of 6% over the previous year or S$1.7 million, from S$26.6 million in FY2008 to S$28.3 million in FY2009. The Group’s profitability from this segment was further boosted by an S$4.1 million share of profits from associates.

  2. In FY2009, Asia Power added impetus to its philosophy of expanding and developing a clean and green renewable energy platform with some key acquisitions. Leveraging on China’s policy of encouraging investment in eco-friendly power generation, the Group completed the acquisition of 20% stake in Fu Da Xin Holdings Ltd for a purchase consideration of RMB18.05 million (S$3.9 million). Since Fudaxin’s mainstay is hydropower generation, this investment is a step forward in our eco-friendly vision.

  3. Revenue from the Group’s power-related technology business segment declined from S$15.5 million in FY2008 to S$9.8 million in FY2009. The Group’s subsidiary JAZ Technology Development (Shenzhen) Ltd Co, which is in the business of providing power automation systems and instruments, has been negatively impacted by the financial downturn in FY2009. Competitive market conditions have reduced demand and margins for its products. Correspondingly, operating profit for this segment fell from S$1.1 million in FY2008 to S$0.3 million in FY2009.

  4. In FY2009, the Group brought in a strategy investor to invest in its subsidiary, Asia Power (Leibo) Hydroelectricity Co Ltd (“Leibo”) , through enlarged paid up capital. The Group also disposed its partial equity interest of 14.25% in Asia Power (Leibo) Hydroelectricity Co Ltd (“Leibo”), a subsidiary of the Company, to an existing shareholder of Leibo for a consideration of RMB 13.2 million (S$2.6 million). As a result of this divestment, the Group’s effective interest in Leibo is reduced from 87%to 53.44%, held through Asia Hydro Power Investment Pte Ltd.

  5. In FY2009 the Group incorporated a wholly owned subsidiary Asia Power (Hainan) Investment Co Ltd registered in the PRC. This company will serve as the Group’s investment holding company for its PRC-based projects, accruing tax and economic benefits. AP Hainan has a registered capital of US$31 million, which is to be paid up over a period of two years from the company’s inception.

  6. The Group successfully completed the placement of 60 million ordinary shares at an issue price of S$0.155 per ordinary share in the 3rd quarter of FY2009 to Octis Limited and Yorkshire International Limited (“Subscribers”). Based on the understanding of the Directors, it is the intention of the Subscribers to invest long term in the Group. The successful completion of the placement exercise, a further testament to the interests and confidence that public investors place in Asia Power, has further enhanced the financial strength of the Group.

LOOKING AHEAD

While the global economy is on the road to recovery, the general operating environment for businesses is also seeing an improvement. In FY2010, the Group will continue to leverage on our experience in the power sector to focus on renewable and sustainable energy investment opportunities as well as other investment opportunities that will further enhance shareholders’ values.

With prudent and efficient management practices, we will keep costs under control while anticipating solid expansion. In FY2010, we hope to meet and exceed shareholder’s expectations, delivering profit and performance.

REWARDING SHAREHOLDERS

In accordance with our belief in rewarding shareholders and to meet investors’ expectations to the best of our abilities, the Board of Directors of Asia Power has proposed a final dividend of S$0.007 cents per ordinary share to shareholders for FY2009.

On behalf of the Board, we would like to express our gratitude to shareholders for their support and to the management team and staff from all our companies and ventures for all their effort. As partners in growth, we all move forward in step with each other and towards a brighter future.

Sha Guangwen Tian Aimin
Executive Chairman Executive Director and CEO
   
1 April 2010