Chairman's Statement
(Extracted from Annual Report 2008)
Overview
FY2008 had been a very eventful year. We experienced the
Wenchuan Earthquake in Sichuan, China, and witnessed
the impact of the global financial turmoil. However, the
Group's prudent management team and dedicated staff
managed to overcome all sorts of adverse factors and
maintained positive development for the Group in FY2008.
In FY2008, the Group recorded revenue of S$148.02
million, representing a 14.01% increase over the previous
corresponding year. Due to Heilongjiang Asiapower Xinbao
Heating & Power Co., Ltd ("Xinbao") proposed to install
bigger capacity of combined heat-and-power plant to
replace certain existing lower capacity power generators,
the remaining useful life of those power generators to be
replaced were shortened, this had resulted in greater wear
and tear of the plant's facilities, as a result of which, higher
cost of sales was incurred. Combined with impairment
loss related to shutdown of associations operation to
compliance with PRC regulation, our Group's net profit
decreased to S$17.3 million in FY2008. Disregarding the
above factors, net profit of the Group on a year-on-year
basis had maintained growth in FY2008.
To maximise the Group's benefits in view of the PRC's bid
to structural changes in the PRC's power industry, as well
as, conserve energy for environmental reasons, the Group
aims to increase the production capabilities of our Xinbao
plant by replacing a new power generator with facilities
capacity of 300 megawatts ("MW"). Till date, the National
Energy Bureau in the PRC has given the thumbs up for
this expansion project. The new facilities are expected to complete installation and commence production in year
2011. During the course of installation of this new production
facility, the production of heat-and-power at Xinbao will not
be interrupted. Upon completion of the project, Xinbao's
total capacity will be fired to 375 MW, as compared to its
current output of 225 MW.
Review
1. In FY2008, Asia Power continued to operate based on our belief in the investment development strategy of "clean, green renewable energy." The Group also actively explored to a number of hydro and wind power projects, hence providing ample projects as reserves for our expansion into the renewable energy industry;
2. For the year ended 31 December 2008, the Group continued to improve and promote the standardised safety operations system to our subsidiaries. This system was fully set in place in Asia Power (Neijiang) Hydroelectricity Co., Ltd ("Neijiang") and had achieved good results. As a result, the Group also began recommending this system to Sichuan Anning River Energy Development Co., Ltd ("Anning River") in FY2008. Asia Power's hydropower stations located in Sichuan withstood the test of the Sichuan earthquake and to date, these hydropower stations are operating under stable conditions, with the facilities proven to be safe and secured;
3. In FY2008, Asia Power continued to improve the effective objective management system of the subsidiaries and had achieved sterling results. The main subsidiaries of Heilongjiang Asiapower Xinbao Heating & Power Co., Ltd ("Xinbao"), Anning River and Neijiang recorded significant operating profit growth in FY2008;
4. On top of that, Asia Power actively promoted the optimisation of asset structure, which led us to divest our 31.6% stake in Chongqing Yujiankou to Chongqing Dingtai Energy Sources (Group) Co., Ltd, ("Chongqing Dingtai"). The Group was of the view that the interest from Chongqing Dingtai presented a chance for us to realise the gains from the investment in Chongqing Yujiankou. This divestment provided the Group with a cash consideration of S$13.36 million and transferring benefit of S$2.13 million, which provide additional capital reserve for Group's further development;
5. In accordance with the strategy that the Group had adopted in further developing various renewable energy sources in FY2008, Asia Power had conducted extensive research on several energy projects. During this process, the Group accumulated valuable practical experiences, and attained a higher level of objective understanding, which provided the Group strong references in deciding our future directions in terms of industrial expansion.
Looking Ahead
Generally for FY2009, the Group expects the global economic crisis to continue. However, with countries across the globe rolling out a series of stimulus plans in a bid to jolt the global economy, this will also present opportunities in corporate development. These measures will in turn benefit the Group's standing in the clean and renewable energy industry. This is especially true for China, which, is strongly geared towards promoting the development of renewable energy.
Leveraging on China's positive macro-control policies to expand demand, increase investment and revitalise the economy, Asia Power will move forward to explore, innovate and strive to grasp more opportunities for development based on our sustainable and stable operation model.
Rewarding Shareholders
In line with our belief in rewarding shareholders and to meet the expectations of investors to the best of our abilities, the Board of Directors of Asia Power has proposed final dividend of SG$ 0.9 cents per ordinary share to shareholders for FY2008.
On behalf of the Board, we would like to take this opportunity to express our gratitude to our shareholders for their continuous trust and support. We would also like to thank the management team and staff from every subsidiary and every joint venture company for their effort put in.
We believe that the Board and all our staff will be able to fully assume and fulfill responsibilities required to further develop the Group, and put our best foot forward to generate generous shareholder value and greater wealth to our society.
| Addyson Xue | Sha Guangwen |
| Chairman | Chief Executive Officer |
9 April 2009