ASIA POWER CORPORATION LIMITED 
By
Further to the following queries from Singapore Exchange
Securities Trading Limited received on 6
March 2012, the board of directors of Asia Power Corporation
Limited (the "Company") wishes to provide
additional information on its unaudited financial statements
for the financial year ended 31
December 2011 ("FY2011") announced on 27 February
2012.
Query 1:
We note from the Group's cash flow statement (under financing activities) that interest expense paid increased from RMB17.68 million for FY2010 to RMB28.20 million for FY2011. Please explain the reason for the increase.Response:
The Company acquired Xi'an Kaixin Energy Development
Co., Ltd ( ) ("Kaixin") in July 2010 as a
subsidiary of the Company. Accordingly, the interest expense
of Kaixin had been consolidated for five months (the
"FY2010 Consolidation Period") in the financial
year ended 31 December 2010 ("FY2010"), and for the
full year in FY2011.
The increase in interest expense from RMB17.68 million for
FY2010 to RMB28.20 million for FY2011 is primarily due to the
increase in interest expense contributed by Kaixin. The
interest expense of Kaixin amounted to RMB15.6 million in
FY2011, which is RMB11.1 million more than the interest
expense of Kaixin in the FY2010 Consolidation Period. In
addition, the interest rates for borrowings in the
People's Republic of China for FY2011 increased
approximately 80 basis points as compared to that in FY2010.
The increase is partially offset by interest savings from
repayments of bank loans amounting to RMB52.6 million during
2011.
Query 2:
We refer to Section 16 of the announcement, which requires disclosure on a breakdown of sales. We note that the profit margin for FY2011 decreased from 7.4% for the first half year to 4.7% for the second half year. Please provide the reasons for the decrease in profit margin.Response:
The decrease in profit margin for FY2011 from 7.4% for the
first half year to 4.7% for the second half year is mainly
attributable to (a) an impairment loss of RMB1.5 million on
the cost of investment of associate, Changzhou Suyuan
Electric Power Co., Ltd and (b) an accelerated amortisation
amounting to RMB1.2 million on the intangible assets -
customers relationship, which arose from the acquisition of
Kaixin, due to lower than expected revenue derived from the
customers acquired.
By Order of the Board
Tian Aimin
Executive Director and Chief Executive Officer
9 March 2012
