Pan Asia Announces 2014 Annual Results

HONG KONG, Mar 30, 2015 - (ACN Newswire) - An integrated environmental protection ("EP") services and eco-friendly construction materials provider in the PRC, Pan Asia Environmental Protection Group Limited ("Pan Asia" or the "Group") (stock code: 556), announced its annual results for the year ended 31 December 2014. Throughout the financial year of 2014, leveraging its extensive industry expertise, professional research and development capabilities and technologies, the Group has maintained its position as an integrated EP services and eco-friendly construction materials provider by leveraging its well-established industry experience, which led to remarkable business growth.During the year under review, the Group achieved a total turnover of RMB 587.1 million, similar to that of 2013 (2013: RMB588.0million). Gross profit rose to about RMB151.4 million (2013: RMB64.9 million) and gross profit margin was 25.8% (2013: 11.0%). This growth was mainly attributable to the substantial rise in revenue from the Wood Wool Cement Board ("WWCB") business and an improvement in the gross profit margins of sales of EP products and equipment which combined to deliver a business turnaround. The Group recorded a profit attributable to owners of the Company of RMB28.4 million, a turnaround from the net loss in 2013 (2013: loss of RMB21.1 million). The basic earnings per share were RMB3.47 cents (2013: basic loss per share of RMB2.64 cents).The Board has recommended payment of a final dividend of HK 2.0 cents per share for the year ended 31 December 2014 (2013: Nil). Mr. JIANG Quanlong, Chairman of Pan Asia, said, "The high priority and more active promotion of EP by the Central Government of the PRC have created favorable opportunities for the industry as a whole and the Group in particular. The Group as an integrated EP services and eco-friendly construction materials provider is leveraging its abundant industry experience while enhancing the regional cooperation with its strategic partners. In order to capture the opportunities presented by the surging market demand for green construction materials as mandated by Government policies, the Group is boosting its development of the eco-friendly construction materials business by further strengthening the promotion of its WWCB. Meanwhile, the Group has further expanded its scope of business through an extensive customer base to drive the revenue in the flue gas and waste water treatment business segments. As we continuously modify the business structure and strengthen our bargaining power, we are confident we can maintain a long-term healthy business growth."Business Review Sales of EP Products and EquipmentDuring the year, the Group completed 67 water treatment-related sales contracts with the water treatment business generating a turnover of approximately RMB 463.1 million, accounting for approximately 78.9% of the Group's total turnover. After the Central Government tightened the requirements for water treatment of coal chemical companies which consume enormous quantities of water resources, the Group has entered this potentially lucrative new sector to further boost the income stream from this business segment.The Group's comprehensive supply chain in flue gas treatment products and equipment provides services ranging from engineering design to maintenance services. The Group has been cooperating with a wide range of customers, including both government-owned corporations and private enterprises. In addition to desulphurization and denitrification services, the Group has also recently undertaken dedusting project of coal-fired power plants, expanding its scope of business and revenue. During the year ended 31 December 2014, the Group completed three projects related to the sale of equipment for flue gas treatment, generating a turnover of RMB15.5 million, which represented 2.6% of the Group's total turnover. EP Construction Engineering ProjectsDuring the year, this segment recorded a turnover of approximately RMB1.6 million, accounting for about 0.3% of the Group's total turnover. Provision of EP Related Professional ServicesThe Group's subsidiary, the Shanghai Environmental Engineering Design & Research Institute Limited ("SEEDRI") holds Grade A qualification in EP engineering design, which enables it to provide EP project design services for cross-sector clients around the PRC. During the year under review, this segment recorded a turnover of approximately RMB4.3 million, accounting for about 0.7% of the Group's total turnover. Manufacture of EP Construction MaterialsIn view of the huge potential of WWCB, the Group has engaged in cooperation with the industry leader from the Netherlands, and has introduced WWCB and large wall components in the PRC on an exclusive basis. As at the end of 31 December 2014, three production lines have commenced commercial operation. This segment recorded a turnover of approximately RMB102.7 million, accounting for about 17.5% of the Group's total turnover with a profit margin up to 47.1%.As the largest and most advanced WWCB producer in the world, the Group leverages its own R&D capability to upgrade the products to meet local needs in the PRC. During the year, the Group has compiled and submitted the national industry standards "Technological Specifications for Application of WWCB" to the Ministry of Housing and Urban-Rural Development of the PRC for approval. The national standards for WWCB construction and inspection are expected to roll out in May 2015. When put into effect as a national standard, it will further strengthen the Group's leading position in the segment, speed up the market penetration of WWCB and facilitate the revolution of construction materials.The Group has secured its first order for its large wall components in a collaborative project covering a gross floor area of approximately 500,000 m2 with Longyuan Construction Group Co. Ltd. Marking a major step in the market development of WWCB, the Group is to provide prefabricated external wall to a residential district in Inner Mongolia. The first phase of the project has already commenced construction in mid-2014. As a cross-year project, it has contributed promising income during the year under review and will continue to generate income in 2015. In terms of market development, the Group has stepped up promotion of WWCB as building panels and blocks in replace of traditional wall building materials, and is actively striving to develop the North America and Asia markets. The Group has recorded regular monthly sales to South Korea and received orders from Bhutan and other Southeast Asian countries. Besides, the Group has set up a dedicated team in Hong Kong for the sales and promotion of WWCB to Hong Kong and overseas markets.ProspectsEco-friendly construction materials business - increasing popularity with immense potentialDriven by the Central Government's policies and its increased efforts to promote the construction of green buildings, the market demand for eco-friendly construction materials continues to increase, and the increasing market recognition of the benefits of WWCB underscores its strong development potential. In view of the huge opportunities in the industry, the Group has been aggressively expanding its eco-friendly construction materials business. The Group owns the exclusive right to import WWCB production facilities from the Netherlands and operate them in the PRC and its engineering experts and sales and marketing team have been actively promoting the products. With the national standards for WWCB construction and inspection, architectural design institutes can design projects based on these standards. As a result, the market recognition of WWCB is set to expand and the application of WWCB will become more widespread across a range of projects. Meanwhile, the preliminary construction of the Yihe residence project in Inner Mongolia and a resort hotel project in Yichang, Hubei have been completed. It is expected that the construction of the first high-rise building will be completed in 2015.The Group has commenced construction of two highway sound barrier projects. The Foshan Highway project is expected to complete in the first half of 2015. The Group's participation in the Jiamin Highway project is also in progress with the preliminary phase completed. Besides participating in infrastructure works, the Group's participation in projects for the Yixing Cultural Center and China Communications Construction Company Real Estate Company Limited has been confirmed, and is expected to contribute income in 2015. With three production lines already in commercial operation, the Group will conduct final test runs for two more production lines in April 2015 and for another one in mid-2015. With all these new production lines scheduled to be fully operational by June 2015, the Group's productivity in the second half of 2015 will be improved and its workflow will be optimized.To make the most out of the business opportunities, the Group is leveraging its abundant industry experience to expand production capacity, as it enhances regional cooperation with strategic partners. At the same time, apart from cooperating with construction companies and contractors, the Group is directly selling WWCB within specific application areas and geographical regions, while improving its product specifications and quality in an effort to optimize its sales network.Water and flue gas treatment business - continues to bring revenue with stable performanceThe strongly supportive national policies have significantly spurred domestic demand for the EP products. Around 4,500 waste water treatment plants in the PRC are required to be upgraded to Grade 1A emission standards, thus creating a strong market demand. The Group's water treatment business for its part owns several patents. Its special chemical ingredients can dissolve the organisms in sludge and reduce sludge volume by 50%, thus saving around 70% of waste water treatment cost and improving the cost efficiency of water treatment. As the Group's proprietary technology is fundamentally different from traditional sludge treatment methods, it can reduce secondary pollution as well. As a result, the Group's participation in several coal chemical water treatment projects in Inner Mongolia are expected to be confirmed soon, which promise to contribute substantial income.On top of desulphurization and denitrification works, the Group will undertake demercuration projects. By leveraging its strong desulphurization experience, the Group will start to provide demercuration services to clients engaged in a variety of industries including non-ferrous metals, power generation, iron and steel, cement and glass production, aiming to help these clients reduce pollution from heavy metal emissions. Upon completion of the testing of its demecuration processes, the Group will provide one-stop EP solutions incorporating desulphurization, denitrification and demercuration. Currently, the Group has 53 uncompleted water and flue gas treatment contracts with a total value of approximately RMB639.7 million on hand.Mr. JIANG concluded, "Looking ahead, we will continue our steady expansion into two key segments in the EP industry, flue gas and waste water treatment along with the eco-friendly construction materials business. With the emerging opportunities provided by the country's continuous enhancement of the EP regulation system and the strong support to the eco-friendly construction materials industry, we will continue to strengthen R&D and leverage our technologies to solidify our market position in the PRC."About Pan Asia Environmental Protection Group LimitedEstablished in 1998, the Group was listed on the Main Board of the Hong Kong Stock Exchange in December 2007, As an integrated environmental protection ("EP") services provider as well as an eco-friendly construction materials producer in the PRC, the Group's strong manufacturing and processing capability enable it to construct and operate large scale EP projects. The customer base stretches across 15 provinces, directly controlled municipalities and autonomous regions in the PRC. The Group has expanded into the eco-friendly construction materials business by introducing energy-conserving Wood Wool Cement Board ("WWCB") wall materials production lines from the Netherlands in 2010. The Group has already commenced operation in several demonstration projects in Shanghai, Yixing, Xiamen, Hubei Province and Inner Mongolia Autonomous Region. As the EP projects sector gradually matures, the eco-friendly construction materials business is set to be a new growth driver for the Group.For details, please visit: www.paep.com.cnContact:

Strategic Financial Relations Limited
Joanne Lam   (852) 2864 4816   [email protected]
Evonne Xiao  (852) 2114 4981   evonne,[email protected]
Betty Dong   (852) 2864 4861   [email protected]
Fax: 2527 1196
https://www.sprg.com.hk  

Copyright 2015 ACN Newswire . All rights reserved.

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