Homepage
PR Newswire
02-09-2011, 04:47 AM
(This post was last modified: 20-01-2015, 10:35 AM by CityFarmer.)
Business Times - 02 Sep 2011
HanKore expected to return to profit path
Further provisions for impairment losses seen unlikely
By LYNETTE KHOO
HAVING put the nightmare of impairment loss provisions behind it, HanKore Environment Tech Group is now expected to swing back into the black for the current financial year ending June 2012.
The group, having shaken off its chequered past with a revamped management team and board of directors, is now looking forward to the next three to five years, which chairman and CEO David Chen sees as the 'golden years' for the Chinese environmental industry.
HanKore chief financial officer Stanley Yeung said he is confident that there will be no further provisions for impairment losses on the value of the wastewater treatment plants and other assets, project costs over-run and repair costs.
Known formerly as Bio-Treat Technology, HanKore reported a net loss of 405.7 million yuan (S$76.6 million) for fiscal 2011 ended June 30, compared with a net profit of 222.1 million yuan for FY2010. This was due to an exceptional loss of 399.4 million yuan resulting from the provisions, against an exceptional gain of 306.2 million yuan for FY2010.
'Without the exceptional loss, we are already in the black in gross profits,' said Mr Yeung. 'These provisions have been fully written down and they are unlikely to be incurred again.'
The group has 14 large-scale municipal water/wastewater treatment projects in Beijing, Jiangsu, Shandong, Shaanxi and Henan.
In the first meeting with reporters here since his appointment, Mr Chen said HanKore is aiming to achieve a water capacity of five million tonnes per day in three years and 10 million tonnes per day in five years, up from the current built capacity of one million tonnes per day. It will also seek strategic cooperation with business partners to enter the overseas water service market, with an eye on the Middle East, Africa and South-east Asian regions.
Within China, the group is looking at potential projects in Shaanxi, Jiangsu and Chongqing and hopes to tap the recently inked cooperation agreement with the Xianyang City Environmental Protection Bureau. The latter has given HanKore the preferential right to invest in environmental projects in Xianyang City with an aggregate value of not less than one billion yuan within five years.
HanKore is seeking long-term financing for future projects, but is cautious not to fall into the same trap as the former Bio-Treat, Mr Yeung said, though he does not rule out the possibility of issuing convertible bonds again.
Earlier financial woes in the former Bio-Treat arose from a $206 million convertible bonds programme. A default on repayment for early redemptions in 2008 sent the group scurrying to raise funds and incurring more debts.
Uncertainties over its going-concern status due to the debts incurred have triggered audit disclaimers on its financial statements for fiscal 2009 and 2010.
The group has since restructured the outstanding convertible bonds with marked-down bonds and warrants and settled non-bank loans by issuing convertible notes and warrants to a new investor, Giant Delight Holdings, owned by Mr Chen.
More new shareholders, including Singapore-listed Boustead and Chinese private equity Ancient Jade International Holdings, have been ushered in through the sale of notes or shares by Giant Delight. Five of the seven board members have also been replaced.
HanKore expected to return to profit path
Further provisions for impairment losses seen unlikely
By LYNETTE KHOO
HAVING put the nightmare of impairment loss provisions behind it, HanKore Environment Tech Group is now expected to swing back into the black for the current financial year ending June 2012.
The group, having shaken off its chequered past with a revamped management team and board of directors, is now looking forward to the next three to five years, which chairman and CEO David Chen sees as the 'golden years' for the Chinese environmental industry.
HanKore chief financial officer Stanley Yeung said he is confident that there will be no further provisions for impairment losses on the value of the wastewater treatment plants and other assets, project costs over-run and repair costs.
Known formerly as Bio-Treat Technology, HanKore reported a net loss of 405.7 million yuan (S$76.6 million) for fiscal 2011 ended June 30, compared with a net profit of 222.1 million yuan for FY2010. This was due to an exceptional loss of 399.4 million yuan resulting from the provisions, against an exceptional gain of 306.2 million yuan for FY2010.
'Without the exceptional loss, we are already in the black in gross profits,' said Mr Yeung. 'These provisions have been fully written down and they are unlikely to be incurred again.'
The group has 14 large-scale municipal water/wastewater treatment projects in Beijing, Jiangsu, Shandong, Shaanxi and Henan.
In the first meeting with reporters here since his appointment, Mr Chen said HanKore is aiming to achieve a water capacity of five million tonnes per day in three years and 10 million tonnes per day in five years, up from the current built capacity of one million tonnes per day. It will also seek strategic cooperation with business partners to enter the overseas water service market, with an eye on the Middle East, Africa and South-east Asian regions.
Within China, the group is looking at potential projects in Shaanxi, Jiangsu and Chongqing and hopes to tap the recently inked cooperation agreement with the Xianyang City Environmental Protection Bureau. The latter has given HanKore the preferential right to invest in environmental projects in Xianyang City with an aggregate value of not less than one billion yuan within five years.
HanKore is seeking long-term financing for future projects, but is cautious not to fall into the same trap as the former Bio-Treat, Mr Yeung said, though he does not rule out the possibility of issuing convertible bonds again.
Earlier financial woes in the former Bio-Treat arose from a $206 million convertible bonds programme. A default on repayment for early redemptions in 2008 sent the group scurrying to raise funds and incurring more debts.
Uncertainties over its going-concern status due to the debts incurred have triggered audit disclaimers on its financial statements for fiscal 2009 and 2010.
The group has since restructured the outstanding convertible bonds with marked-down bonds and warrants and settled non-bank loans by issuing convertible notes and warrants to a new investor, Giant Delight Holdings, owned by Mr Chen.
More new shareholders, including Singapore-listed Boustead and Chinese private equity Ancient Jade International Holdings, have been ushered in through the sale of notes or shares by Giant Delight. Five of the seven board members have also been replaced.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
