China Technology Solar Power Hldgs : Announcements and Notices - FIRST QUARTERLY RESULT ANNOUNCEMENT FOR THE THREE MONTHS ENDED 30 JUNE 2019 (205KB, PDF)

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited ("Stock Exchange") take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement, for which the directors ("Directors") of China Technology Solar Power Holdings Limited ("Company", together with its subsidiaries, the "Group", "our Group", "we" or "us") collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Stock Exchange ("GEM Listing Rules") for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

CHINA TECHNOLOGY SOLAR POWER HOLDINGS LIMITED

中科光電控股有限公司*

(incorporated in the Cayman Islands with limited liability)

(Stock Code: 8111)

FIRST QUARTERLY RESULT ANNOUNCEMENT

FOR THE THREE MONTHS ENDED 30 JUNE 2019

CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE

GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

• For identification purpose only

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QUARTERLY RESULTS HIGHLIGHTS

The loss attributable to owners of the Company for the three months ended 30 June 2019 was approximately RMB5.5 million (2018: loss attributable to owners of the Company of approximately RMB13.3 million (restated)).

The revenue of the Group for the three months ended 30 June 2019 was approximately RMB25.8 million, representing an increase of approximately 2,696.7 per cent. as compared with approximately RMB0.9 million (restated) recorded for the three months ended 30 June 2018.

Gross profit margin of the Group was approximately 15.4 per cent. for the three months ended 30 June 2019, as compared to approximately 34.2 per cent. for the three months ended 30 June 2018.

Basic loss per share for the three months ended 30 June 2019 was approximately RMB0.30 cents (2018: Basic loss per share of approximately RMB0.93 cents (restated)).

The Directors do not recommend the payment of a dividend for the three months ended 30 June 2019 (2018: Nil).

I am pleased to present the unaudited consolidated results of China Technology Solar Power Holdings Limited for the three months ended 30 June 2019.

BUSINESS REVIEW

The Group was principally engaged in (i) sales of solar power related products; (ii) new energy power system integration business; (iii) sales of self-service automatic teller machine ("ATM") systems and printing systems, and (iv) provision of hardware and software technical support services in the People's Republic of China ("PRC" or "China") during the three months ended 30 June 2019.

The Group recorded a loss attributable to owners of the Company of approximately RMB5.5 million for the three months ended 30 June 2019 (2018: loss attributable to owners of the Company of approximately RMB13.3 million (restated)), such reduction in loss was mainly attributable to (i) the increase in revenue of the Group during the three months ended 30 June 2019 and (ii) the decrease in administrative expenses of the Group during the three months ended 30 June 2019 as a result of the Group's cost control policy.

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The Group's revenue amounted to approximately RMB25.8 million for the three months ended 30 June 2019, representing an increase of approximately 2,696.7 per cent. as compared with approximately RMB0.9 million (restated) recorded for the three months ended 30 June 2018. Such increase was mainly attributable to the increase in revenue generated from the sales of solar power related products by approximately RMB24.8 million during the three months ended 30 June 2019, as compared with the same period last year.

The Group's gross profit margin was approximately 15.4 per cent. for the three months ended 30 June 2019, as compared to approximately 34.2 per cent. for the three months ended 30 June 2018. The gross profit margin for the three months ended 30 June 2019 was lower than that of the same period last year because the solar power related products sold by the Group in the three months ended 30 June 2019 were ready-made products in the market and the products sold by the Group in the same period last year were customised products with a higher profit margin.

Selling expenses incurred by the Group for the three months ended 30 June 2019 amounted to approximately RMB0.6 million (2018: approximately RMB0.7 million (restated)), representing a decrease of approximately 14.7 per cent. because of the Group's policy on cost control.

Administrative expenses incurred by the Group for the three months ended 30 June 2019 amounted to approximately RMB6.0 million (2018: approximately RMB7.7 million (restated)), representing a decrease of approximately 22.7 per cent. because of the Group's policy on cost control.

Basic loss per share was approximately RMB0.30 cents for the three months ended 30 June 2019, as compared with the basic loss per share of approximately RMB0.93 cents (restated) for the three months ended 30 June 2018.

SALES OF SOLAR POWER RELATED PRODUCTS

The business of sales of solar power related products includes the research and development, sales and provision of other relevant technology consultation services of photovoltaic mounting brackets, solar trackers, the guardrail of the solar power stations and solar power related products.

The revenue generated from the sales of solar power related products was approximately RMB25.8 million for the three months ended 30 June 2019 (2018: RMB0.9 million (restated)), accounted for approximately 100.0 per cent. (2018: 100.0 per cent.) of the Group's revenue.

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NEW ENERGY POWER SYSTEM INTEGRATION BUSINESS

The PRC government continues to support the development of the solar energy industry. Although the PRC government has cut down on subsidy on solar electricity, the Thirteenth Five-Year Plan for the National Economic and Social Development has set clear targets on the development of different renewable energy technologies including but not limited to technologies relating to solar photovoltaic power and solar thermal power.

Considering the PRC government's encouragement on distributed photovoltaic power generation, the Group continue to look for other solar energy generation projects and new energy power system integration services.

In October 2018, Shaanxi Baike New Energy Technology Development Co., Ltd.*（陝西百科新能源 科技發展有限公司）("Shaanxi Baike"), an indirect wholly-owned subsidiary of the Company, and an engineering company in Sichuan province of the PRC ("Sichuan Company") jointly entered into a subcontractor contract ("Subcontractor Contract") with PowerChina Hebei Engineering Corporation Limited ("PowerChina") for the provision of contractor services for the construction of a photovoltaic power station in Erquanjing Xiang, Zhangbei county of the PRC at a contract price of RMB380 million (value-added tax included) ("Zhangbei Project"). The Zhangbei Project has a designed capacity of 500MWp. The Subcontractor Contract is for the construction of 100MWp of the first phase of the Zhangbei Project of 240MWp. Shaanxi Baike and Sichuan Company also entered into an engineering consultancy contract ("Engineering Consultancy Contract") pursuant to which Shaanxi Baike agreed to provide engineering consulting services in relation to the first phase of the Zhangbei Project at a contract price of RMB30 million (value-added tax included). As at the date of this announcement, the construction of the Zhangbei Project has already commenced, and of which approximately 22.0 per cent. and 60.0 per cent. of the Subcontractor Contract and Engineering Consultancy Contract respectively have been completed in last year.

There was no revenue generated from the new energy power system integration business during the three months ended 30 June 2019 (2018: Nil) because the Group was awaiting the system testing and progress report from PowerChina for the recognition of revenue generated from the provision of new energy power system integration services under the Subcontractor Contract during the three months ended 30 June 2019. The Group expects to obtain such report from PowerChina in the next quarter this year, so as to recognize the revenue generated from the new energy power system integration business in the second quarter of 2019.

• For identification purpose only

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Power system integration refers to the optimisation of technologies in the civil engineering system, electrical system and other ancillary system, database technologies, surveillance and software management. The Group shall source equipment and products from different vendors based on the scale and capacity of the respective new energy power stations and subsequently carry out integration of the separated equipment, functions and information into a connected, unified and coordinated system. Power system integration enables the utilisation of resources at their best to enhance optimisation of performance of the entire system and achieve centralised, high efficiency, balanced performance, substitutable and available for maintenance, as well as low cost management. The Group also offers subsequent system management services to the new energy power stations.

SALES OF SELF-SERVICE ATM SYSTEMS AND PRINTING SYSTEMS

There was no revenue generated from the sales of self-service ATM systems and printing systems during the three months ended 30 June 2019 (2018: Nil) mainly as a result of the business restructuring during the period under review. The Group is now in the process of discussion with potential customers for new contracts as at the date of this announcement.

PROVISION OF HARDWARE AND SOFTWARE TECHNICAL SUPPORT SERVICES

There was no revenue generated from the provision of hardware and software technical support services during the three months ended 30 June 2019 (2018: Nil) mainly as a result of the business restructuring during the period under review.

SIGNIFICANT INVESTMENTS HELD AND MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES

There were no significant investments or material acquisition or disposal of subsidiaries by the Group during the period under review.

LIQUIDITY, FINANCIAL RESOURCES AND TREASURY POLICIES

As at 30 June 2019, the Group had cash and bank balances of approximately RMB3.1 million (31 March 2019: approximately RMB2.6 million). The Group had no outstanding bank overdraft as at 30 June 2019 (31 March 2019: Nil).

The Group financed its operations by internally generated cash flow and borrowings.

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